To get a Michigan tax clearance certificate, file Form 5156 (Request for Tax Clearance Certificate or Tax Status Letter) by mail with the Michigan Department of Treasury after you have filed Form 163 electronically through Michigan Treasury Online. There is no fee, and Treasury responds within 60 days.1Michigan Department of Treasury. Tax Clearance Frequently Asked Questions
Why the Certificate Matters
The certificate is the Department of Treasury’s written confirmation that a business has paid every tax administered under Michigan’s Revenue Act (Public Act 122 of 1941), including income, sales, use, withholding, and corporate income tax, among others.2Michigan Department of Treasury. Intent to Assess (Bill for Taxes Due) Once Treasury issues it, escrow funds tied to the transaction are released and the buyer is relieved of successor liability for the seller’s past tax debts.3Michigan Department of Treasury. Request for Tax Clearance Certificate or Tax Status Letter
The stakes are real. Under MCL 205.27a, a buyer who purchases a going or closed business (or its stock of goods) without escrowing enough to cover the seller’s potential taxes, interest, and penalties becomes personally liable for those debts, up to the fair market value of the business minus any secured interests that outrank the state’s tax lien.4Michigan Legislature. Michigan Compiled Laws Section 205.27a The escrow should be at least the amount Treasury identifies in its Tax Clearance Liability Explanation letter.1Michigan Department of Treasury. Tax Clearance Frequently Asked Questions
Certificate of Clearance or Tax Status Letter
Form 5156 covers two different documents, and choosing the wrong one is a common mistake. A Certificate of Clearance is the document that triggers escrow release and eliminates successor liability. Request it when you are selling a business, selling business assets, or dissolving or withdrawing a business registered with the Michigan Department of Licensing and Regulatory Affairs (LARA).3Michigan Department of Treasury. Request for Tax Clearance Certificate or Tax Status Letter
A Tax Status Letter only reports your current standing with Treasury. It does not provide clearance and does not release escrow funds. If a status letter is all you need, complete only Parts 1 and 4 of the form.3Michigan Department of Treasury. Request for Tax Clearance Certificate or Tax Status Letter
How to Apply
To be eligible for either document, the business must be registered for taxes administered under the Revenue Act. If the business was never registered with the state for any of those taxes, Treasury will not issue a clearance or a status letter.3Michigan Department of Treasury. Request for Tax Clearance Certificate or Tax Status Letter
File Form 163 First
Before submitting Form 5156, file Form 163 (Notice of Change or Discontinuance) electronically through Michigan Treasury Online at mto.treasury.michigan.gov. Without that filing on record, your clearance request will not move forward.3Michigan Department of Treasury. Request for Tax Clearance Certificate or Tax Status Letter
Complete the Right Parts of Form 5156
Part 1 covers basic business information: business name and either your Federal Employer Identification Number (FEIN) or Treasury (TR) number. Do not enter Social Security numbers or LARA ID numbers in Part 1, and do not include the buyer’s information anywhere on the form.3Michigan Department of Treasury. Request for Tax Clearance Certificate or Tax Status Letter
Which other parts you complete depends on why you’re asking:
- Business dissolution or withdrawal: Parts 1, 2, and 4.
- Sale of a business or business assets: Parts 1, 3, and 4.
- Tax Status Letter only: Parts 1 and 4.
Where to Send It and How Long It Takes
Mail the completed form to the Michigan Department of Treasury, Tax Clearance Section, PO Box 30778, Lansing, MI 48909. There is no online submission for Form 5156, and no fee.1Michigan Department of Treasury. Tax Clearance Frequently Asked Questions
Treasury responds within 60 days of receipt. Requests are worked in the order received and cannot be expedited.1Michigan Department of Treasury. Tax Clearance Frequently Asked Questions Build that window into any closing timeline; if a deal is set to close on a specific date, the form should be in the mail well ahead of it.
Get Compliant Before You File
Treasury reviews the full range of taxes it administers when working a clearance request, including sales tax, use tax, income withholding tax, corporate income tax, motor fuel tax, cigarette tax, and the repealed Single Business Tax and Michigan Business Tax for any periods when those taxes applied.3Michigan Department of Treasury. Request for Tax Clearance Certificate or Tax Status Letter A deficiency in any one of them can block the certificate.
Before submitting Form 5156, pull together every return, confirm balances are paid, and clear any outstanding notices from Treasury. Discovering a problem after the form is in Treasury’s hands means starting over, because a resolved issue does not reactivate a pending request.
What Happens If Treasury Denies the Request
If Form 5156 is missing required information, Treasury denies the request outright.1Michigan Department of Treasury. Tax Clearance Frequently Asked Questions More often, the review turns up unpaid taxes or unfiled returns, and Treasury sends a letter detailing what has to be resolved.
Once the issues are cleared up, you cannot simply call Treasury and ask it to reopen the file. A brand-new Form 5156 has to be submitted; Treasury cannot reuse the information from the prior request.1Michigan Department of Treasury. Tax Clearance Frequently Asked Questions That resets the 60-day clock and can strand a buyer who is waiting on the certificate to release escrow.
Liquor License Transfers
If you are asking because a liquor license is changing hands, the law is narrower than most people assume. Michigan’s Liquor Control Code does not require a tax clearance certificate to transfer a license. It requires the transfer application to include a notice warning the buyer about successor liability and telling the buyer that a certificate can be requested from the seller.5Michigan Legislature. Michigan Compiled Laws Section 436.1501
The Liquor Control Commission’s transfer application (Form LCC-101) puts it this way: “When purchasing interest in a license, a buyer can be held liable for tax debts incurred by the previous owner. Prior to committing to the purchase of any license or establishment, the buyer should request a tax clearance certificate from the seller.”6Michigan Department of Licensing and Regulatory Affairs. License Interest Transfer Application LCC-101 The word “should” is doing the work there. Liquor-licensed businesses often carry substantial sales tax and withholding obligations, and buyers and their attorneys generally treat the certificate as a practical requirement even though the statute frames it as a recommendation.