Fradco, Inc. v. Dept. of Treasury

Fradco, Inc., contested a final assessment issued by the Department of Treasury that disallowed a sales tax deduction following an audit. Through its resident agent, Fradco requested the department send all information regarding tax matters to the certified public accountant (CPA) that Fradco designated. The department mailed a copy of its preliminary decision and order of determination to Fradco's CPA. It sent the final assessment only to Fradco's place of business. Fradco's CPA inquired about the final assessment and was informed a month later that a final assessment had been issued, that no appeal had been taken, and that the matter was now subject to collection. The letter did not include a copy of the assessment. The department sought summary judgment in Fradco’s appeal, arguing that the tribunal lacked jurisdiction because the appeal had not been filed within 35 days after the final assessment. The tribunal denied the motion, concluding that state law provided a parallel notice requirement whenever a taxpayer properly filed a request that notices be sent to a representative and that notice to Fradco alone had not been sufficient to start the 35-day period. Similarly, SMK, LLC, contested a final assessment issued by the Department of Treasury. SMK had hired a CPA and designated him to represent it for purposes of the sales tax audit, giving him limited authorization to inspect or receive confidential information, represent SMK, and receive mail from the department. The department faxed the CPA a notice stating that the audit package had been submitted. It sent a final assessment to SMK via certified mail, although SMK claimed that it did not receive the final assessment. The CPA made several inquiries to the department and received no answers from the department. Five days after the appeal period had allegedly run, the department sent SMK's CPA the final assessment and a letter stating that the deadline for appeal had passed. The Supreme Court granted the department leave to appeal and ordered that the Fradco and SMK appeals be heard together. Upon review, the Supreme Court concluded that if a taxpayer has appointed a representative, the Department of Treasury must issue notice to both the taxpayer and the taxpayer’s official representative before the taxpayer’s 35-day appeal period under MCL 205.22(1) begins to run. View "Fradco, Inc. v. Dept. of Treasury" on Justia Law