Lawmakers press Treasury on falling audit coverage for out‑of‑state corporations as training and staffing shift

Lawmakers pressed Michigan Treasury leaders over a multiyear decline in completed field audits, particularly for out‑of‑state corporate taxpayers, during a House Oversight hearing that focused on the agency's post‑migration operations.

Representative Wolford and other members cited numbers in Treasury materials showing a peak of about 2,237 in‑state field‑audit completions in 2019 falling to about 1,676 in 2025, and out‑of‑state audits dropping from 329 to 86 over the same span. Members said the drop in out‑of‑state coverage is concerning because those audits can yield significant tax determinations.

Teresa Newton, revenue compliance director, told the committee that Treasury's field auditors cover all tax types and that audit workloads and expected completions are calibrated to case complexity. Newton said the bureau hired roughly 50 new auditors between 2023 and 2025 and instituted a staggered, multi‑year training program that temporarily reduces per‑auditor output while new hires complete on‑the‑job instruction and mentoring.

"When an auditor comes brand new to the state of treasury ... they have a three‑year training period," Newton said, explaining why recent hiring can temporarily lower audit counts while building long‑term capacity. Treasury also said it is using data analytics to select higher‑risk returns and that corporate income tax (CIT) revenue has increased, noting that CIT assessments nearly doubled between FY20 and FY24.

Members sought specifics about the share of revenue derived from corporations headquartered outside Michigan and whether the department should shift resources or extend statutory audit windows; Treasury said the agency does not present revenue split statistics by domicile because addresses on returns may reflect legal addresses, representatives or other non‑operational addresses, and that statute sets limitations around audit lookback periods though statutory extensions can be exercised.

The committee asked Treasury to provide additional breakdowns and to follow up on how remote auditing and case assignment changes affect coverage. No formal audit‑related policy changes were enacted at the hearing; members requested supplemental data in follow‑up to the record.