MI HB5988

Amends the Use Tax Act to add protections for taxpayers who maintain adequate records and file all required returns, prohibiting the Department of Treasury from using indirect audit procedures without documented reason to believe records are inaccurate.

Requires that any tax deficiency determination based on a projection from a sample must have written approval from the taxpayer; prohibits arbitrary indirect audits.

Establishes that indirect audits must include a review of taxpayer books and records, evaluation of evidence credibility and reasonableness before determining tax liability, investigation of all reasonable taxpayer evidence refuting computations, and allowance for income reconstruction using any reasonable method.

Defines "indirect audit procedure" as an audit method using circumstantial evidence to determine tax liability based on omitted income, overstated deductions or expenses, or both.

Permits blanket exemption certificates covering all exempt transfers between taxpayer and buyer for up to 4 years or shorter period as agreed upon.