Michigan replaced a 40-year-old tax system this spring — and refunds took longer because of it

State of Michigan income tax processing has reached a 95% completion rate for returns for the 2025 calendar year, state officials said Monday. 

Given the April 15 filing deadline and the usual processing schedule posted on the State of Michigan website, this suggests that some returns and state refunds took much longer than usual to process this spring.  

"I want to thank our taxpayers and tax professionals for their patience during individual income tax season," said Deputy State Treasurer Kavita Kale, who oversees the Treasury Revenue Services service area. 

State officials acknowledged earlier that there had been "concerns regarding notices and returns processing." 

The 95% completion rate is used as a benchmark for year-to-date turnaround, as some tax returns generally do take longer to handle. The Treasury Department said the remaining unprocessed 2025 returns are those that have issues such as missing or incorrect information, are more complicated as they have multiple schedules or credits to calculate, or will be offset for court-ordered garnishments. 

Tax filing season began on January 26. The deadline for filing returns was April 15. 

Under normal circumstances, the Treasury Department said, the processing timeline is usually four to six weeks after receipt of electronically filed returns, and six to eight weeks after receipt of paper returns. Then there is another business week for any refund to be issued. 

Under that timeline, a return that was filed electronically on April 15 would normally result in a refund arriving about May 27.  

If a refund takes more than 45 days from the date of receipt to the refund being issued, the state treasury department must pay interest on the money that is owed. 

The issue this year was replacing a 40-year-old process with a newer system that is intended to provide increased accuracy and security, strengthen fraud detection and identify errors with greater precision. 

"This was the equivalent of moving from a landline phone to a smartphone," Kale said about the update. "Because we were transitioning from decades of accumulated processes and data, we took a conservative, risk-controlled approach. Our focus was stability, accuracy and protection of taxpayer information." 

Tax professionals who were working with clients provided their feedback on the new process and upgrades, and the agency, in turn, provided updates such as recurring problems with retirement pension documents.  

"We really have been dependent on the tax professional and tax community to help us with processes and feedback," said Katina Litterini, who oversees the Tax Administration Services Bureau. "I want to thank them for their understanding and efforts during this system transition." 

One of the issues cited in Monday's update was that the automated phone system sometimes did not provide correct information to callers who inquired about a refund status. That issue will be resolved when the phone system is updated in July. 

State officials also said the older phone system cannot handle peak demand, which led to dropped calls and service failures. The new phone system will have expanded capacity and also allow for callbacks rather than someone waiting in the queue.