Treasury defends Genax tax-system rollout as lawmakers press for fixes after delayed refunds and 27,000 erroneous notices

Michigan Department of Treasury officials told the House Committee on Oversight that the department successfully migrated its individual income tax operations to the Genax platform but that the change exposed a range of operational problems that have delayed refunds and frustrated taxpayers.

"My name is Kavita Kale and I serve as the deputy treasurer with responsibility for overseeing revenue services," Deputy Treasurer Kavita Kale said as she opened the department's presentation on its compliance and service operations. Kale and two bureau directors described the migration as completed on time in November 2025 and said the new system strengthens fraud detection and allows taxpayers to use expanded e-services.

The department reported that more than 5 million returns were processed this tax season and that about $3.46 billion in refunds had been issued as of June 12. Treasury officials said roughly 90% of returns were processed automatically and that the system flagged tens of thousands of returns for issues such as address‑match errors.

But committee members and tax professionals described widespread problems in practice: long average hold times to reach the contact center (Treasury said average speed of answer rose to about 15 minutes), constituent refunds stuck in review for months, and a batch of about 27,000 notice‑of‑adjustment letters that contained incorrect explanatory text.

"We did meet with the partners and we have actually spent time an hour 90 minutes for the last several weeks walking through the different scenarios with the different CPA groups," Bureau Director Katina Litterini told the committee. Treasury said it identified the coding change that led to the erroneous letters, reissued corrected notices within 30 days and established stronger sign‑offs for downstream impacts of system changes.

On offsets and collections, officials said federal IRS levy notices—paused during 2020 and now resumed—contributed to withheld refunds; Treasury said offsets rose and that about $8 million of federal offsets affected over 1 million taxpayers this season. The department said hardship requests surged and some required manual reviews that lengthened processing times.

Lawmakers pressed Treasury for accountability and clearer remedies. Several representatives recounted constituents who missed rent or faced eviction while waiting for refunds. Representative Wolford told the panel, "the goal of oversight is not to point fingers. It's to identify failures, protect our taxpayers, and ensure that our government is not making mistakes on a regular basis." He and others asked whether Treasury would waive penalties for taxpayers harmed by erroneous notices; Treasury said it has identified the impacted population and that penalty waivers will be applied to eligible cases.

Tax professionals testifying at the hearing urged better upload and receipt functions for filings and correspondence, and clearer text on adjustment notices so taxpayers understand why a change occurred. Annette Craft, an accountant who practices in Lansing, said the new system produced documentation losses and duplicative requests that have required repeated resubmissions.

Treasury also pledged near‑term technical fixes: officials said a CX1 contact‑center upgrade with a callback feature will be deployed in late July and that the department has added internal oversight steps before issuing letters that affect taxpayers.

The committee did not take formal action on legislation during the hearing. Officials said Treasury has posted acknowledgements on its website, continues stakeholder outreach with CPA groups and will continue remediation efforts while monitoring metrics for service and compliance.

The oversight committee kept the record open for written testimony (the panel accepted written submissions from Michigan Tax and Accounting Professionals) and adjourned after further member questions.