Michigan Treasury's Tax Debacle Drags On: 27,000 Erroneous Notices and Delayed Refunds Still Unresolved

For a Westland household counting on a state tax refund, a letter saying more money is owed — or that a refund will be smaller — can become an immediate budget problem. Michigan's tax-system rollout has left taxpayers sorting through notices and delays they did not cause.

Michigan Treasury is still addressing fallout from a botched computer system upgrade that sent approximately 27,000 erroneous tax bills to Michigan taxpayers in April 2026 and left an estimated 250,000 residents—roughly 5 percent of filers—waiting for their state income tax refunds as of mid-June 2026.

The erroneous notices were dated between April 7 and April 28, 2026, and incorrectly claimed that taxpayers owed additional taxes or were due smaller refunds, often citing issues with estimated payments, prior-year overpayments, or pension subtractions, despite the taxpayers' prepayments and refunds being correctly recorded in the system.

Working families across Westland, western Wayne County, and Michigan who depend on timely tax refunds for household budgets are among those caught in the delays and confusion.

The error was caused by a programming glitch in GenTax, a modern tax platform used by more than 30 other states that Michigan adopted in spring 2026 to replace the state's 40-year-old mainframe system. The new system performs detailed line-by-line checks that are flagging more returns for manual review, contributing to delays for thousands of taxpayers.

The 27,000 affected taxpayers represent approximately 0.54 percent of the roughly 5 million individuals who submitted income tax returns for the 2026 filing season. Treasury has processed more than 5.12 million individual income tax returns and issued more than 3.43 billion dollars in refunds as of early June 2026, handling roughly 95 percent of returns filed by the April 15, 2026, deadline, according to a June 15, 2026, milestone announcement.

Remaining refund delays involve returns with missing or incorrect information, identity verification requirements, higher-than-typical complexities, or offsets for debts and court-ordered garnishments.

Michigan lawmakers held a House Oversight Committee hearing on June 16, 2026, where they questioned Treasury officials about the tax system errors, refund delays, and overwhelmed phone lines.

"Yes, we made an error, we acknowledged it, we resolved the issue, and we have implemented the necessary changes; that is the best course of action we could take," Kavita Kale, Deputy Treasurer at the Michigan Department of Treasury, said.

The state has paused the issuance of additional notices pending resolution. Treasury officials said the new phone system upgrade replaces a 40-year-old phone system that could not handle peak demand, describing the change as moving from a landline phone to a smartphone.

Taxpayers who received Notice of Adjustment letters dated between April 7 and April 28, 2026, generally do not need to take any action and should not pay the amount listed or file an amended return unless they receive a new, corrected notice confirming an actual balance due.

Taxpayers can verify their account status by logging in to Michigan Treasury eServices at Michigan.gov/mitreasuryeservices to confirm prepayments and refunds are recorded correctly, as the error was only in the letters, not the actual tax accounts. The Individual Income Tax Information Line phone number is 517-636-4486.

Some taxpayers received erroneous refund checks; Treasury advises recipients not to cash these checks and to return uncashed checks to be canceled or repay cashed checks to restore the correct balance.

Treasury has pledged to waive improperly assessed penalties and interest but requires affected taxpayers to submit written requests for relief to claim the waivers — leaving them to navigate a case-by-case resolution process to obtain the corrections the state has promised. The waiver process places the burden on taxpayers to identify the error, verify their account online, submit written requests, and monitor their cases for resolution — work required to fix mistakes they did not make.

Taxpayers who disagree with a notice and do not receive a correction before their right to appeal expires should exercise their right to appeal as stated on the original letter.

Treasury has not announced a deadline by which all erroneous notices will be corrected or all delayed refunds will be issued, nor has it disclosed how long case-by-case resolutions typically take.