International Business Machines Corp. v. Dept. of Treasury

International Business Machines Corporation (IBM) brought an action in the Court of Claims against the Department of Treasury to challenge the department's ruling that IBM was not entitled to apportion its business income tax base and modified gross receipts tax base using a three-factor apportionment formula provided in the Multistate Tax Compact (MCL 205.581 et seq.) and was instead required to apportion its income using the sales-factor formula in the Business Tax Act (MCL 208.1101 et seq.) when calculating its state taxes for 2008. IBM moved for summary judgment under MCR 2.116(C)(10), and the department moved for summary judgment under MCR 2.116(I)(2). After a hearing, the Court of Claims denied IBM's motion and granted the department's motion, holding that the BTA mandated the use of the sales-factor apportionment formula. The Court of Appeals affirmed in an unpublished opinion per curiam. After review, the Supreme Court concluded that IBM was entitled to use the Compact's three-factor apportionment formula for its 2008 Michigan taxes and that the Court of Appeals erred by holding otherwise on the basis of its erroneous conclusion that the Legislature had repealed the Compact's election provision by implication when it enacted the BTA. Furthermore, the Court held that IBM could use the Compact's apportionment formula for that portion of its tax base subject to the modified gross receipts tax of the BTA. View "International Business Machines Corp. v. Dept. of Treasury" on Justia Law