Justia Michigan Supreme Court Opinion Summaries

Plaintiff TOMRA of North America, Inc., brought two separate actions in the Court of Claims against the Michigan Department of Treasury, seeking a refund for use tax and sales tax that plaintiff had paid on the basis that plaintiff’s sales of container-recycling machines and repair parts were exempt from taxation under the General Sales Tax Act, and the Use Tax Act. Plaintiff moved for summary judgment, seeking a ruling on the question whether plaintiff’s container-recycling machines and repair parts performed, or were used in, an industrial-processing activity. The Court of Claims denied plaintiff’s motion and instead granted summary disposition in favor of defendant, holding that plaintiff’s container-recycling machines and repair parts were not used in an industrial-processing activity and that plaintiff therefore was not entitled to exemption from sales and use tax for the sale and lease of the machines and their repair parts. The Court of Claims found that the tasks that plaintiff’s machines performed occurred before the industrial process began, reasoning that the activities listed in MCL 205.54t(3) and MCL 205.94o(3) were only industrial-processing activities when they occurred between the start and end of the industrial process as defined by MCL 205.54t(7)(a) and MCL 205.94o(7)(a), respectively. Plaintiff appealed, and the Court of Appeals reversed, declining to interpret MCL 205.54t(7)(a) and MCL 205.94o(7)(a) as placing a temporal limitation on the activities listed in MCL 205.54t(3) and MCL 205.94o(3), respectively. To this, the Michigan Supreme Court concurred and affirmed the Court of Appeals. The matter was remanded to the Court of Claims for further proceedings. View "TOMRA of North America, Inc. v. Dept. of Treasury" on Justia Law

Honigman Miller Schwartz and Cohn LLP filed a petition in the Tax Tribunal, challenging the income tax assessments issued by the city of Detroit for the tax years 2010 through 2014. The firm argued that under MCL 141.623 of the Uniform City Income Tax Ordinance (UCITO), payment for services performed by attorneys working in the city on behalf of clients located outside the city constituted out-of-city revenue for the purpose of calculating income taxes, not in-city revenue as asserted by the City. The tribunal granted partial summary judgment in favor of the City, reasoning that the relevant consideration for calculating gross revenue under MCL 141.623 was where the work was performed, not where the client received the services. The Court of Appeals reversed, concluding that under MCL 141.623, the relevant consideration for determining the percentage of gross revenue from services rendered in the city was where the service itself was delivered to the client, not where the attorney performed the service. In reaching that result, the Court attributed different meanings to the term “rendered” in MCL 141.623 and the term “performed” in MCL 141.622, reasoning that because the Legislature used different words within the same act, it intended the terms to have distinct meanings. The Michigan Supreme Court reversed: when calculating the percentage of gross revenue from services rendered in the city, the focus was on where the service was performed, not on where it was delivered. View "Honigman Miller Schwartz & Cohn, LLP v. City of Detroit" on Justia Law

Plaintiffs were financing companies that sought tax refunds under Michigan’s bad-debt statute, MCL 205.54i, for taxes paid on vehicles financed through installment contracts. Defendant Department of Treasury (the Department) denied the refund claims on three grounds: (1) MCL 205.54i excluded debts associated with repossessed property; (2) plaintiffs failed to provide RD-108 forms evidencing their refund claims; and (3) the election forms provided by plaintiff Ally Financial Inc. (Ally), by their terms, did not apply to the debts for which Ally sought tax refunds. The Court of Claims and the Court of Appeals affirmed the Department’s decision on each of these grounds. The Michigan Supreme Court held the Court of Appeals erred by upholding the Department’s decision on the first and third grounds but agreed with the Court of Appeals’ decision on the second ground. Accordingly, the Court of Appeals was affirmed as to the second ground, and the matter reversed in all other respects. The case was remanded to the Court of Claims for further proceedings. View "Ally Financial, Inc. v. Michigan State Treasurer" on Justia Law

Baruch SLS, Inc., a Michigan nonprofit corporation, sought exemptions from real and personal property taxes as a charitable institution under MCL 211.7o and MCL 211.9 for tax years 2010–2012. Petitioner based its request on the fact that it offered an income-based subsidy to qualifying residents of Stone Crest Assisted Living, one of its adult foster care facilities, provided those residents had made at least 24 monthly payments to petitioner. The Tax Tribunal ruled that Stone Crest was not eligible for the exemptions because petitioner did not qualify as a charitable institution under three of the six factors set forth in Wexford Med Group v City of Cadillac, 474 Mich 192 (2006). The Court of Appeals reversed with respect to two of the Wexford factors, but affirmed the denial of the exemptions on the ground that petitioner had failed to satisfy the third Wexford factor because, by limiting the availability of its income-based subsidy, petitioner offered its services on a discriminatory basis. The Michigan Supreme Court found the third factor in the Wexford test excluded only restrictions or conditions on charity that bore no reasonable relationship to a permissible charitable goal. Because the lower courts did not consider Baruch’s policies under the proper understanding of this factor, the Court vacated the Court of Appeals’ and Tax Tribunal’s opinions in part and remanded this case to the Tax Tribunal for further proceedings. View "Baruch SLS, Inc. v. Twp of Tittabawassee" on Justia Law

The Tax Tribunal erred by concluding that MCL 211.7n, a statute specifically exempting from taxation the real or personal property owned and occupied by nonprofit educational institutions, controlled over the more general statute, MCL 211.9(1)(a), which authorized a tax exemption for educational institutions without regard to the institution’s nonprofit or for-profit status. SBC Health Midwest, Inc., challenged the city of Kentwood’s denial of its request for a personal property tax exemption in the Tax Tribunal. SBC Health, a Delaware for-profit corporation, had requested a tax exemption under MCL 211.9(1)(a) for personal property used to operate the Sanford-Brown College Grand Rapids. The Michigan Supreme Court held the nonprofit requirement in MCL 211.7n did not negate a for-profit educational institution like SBC Health from pursuing an exemption under MCL 211.9(1)(a). The tax exemption outlined in the unambiguous language in MCL 211.9(1)(a) applies to all educational institutions, for-profit or nonprofit, that meet the requirements specified in MCL 211.9(1)(a). View "SBC Health Midwest, Inc. v. City of Kentwood" on Justia Law

At issue in this case was whether and to what extent (if any) an electric utility was entitled to the industrial-processing tax exemption for tangible personal property located outside its generation plants. The Court of Appeals held that plaintiff was entitled to the full industrial-processing exemption for the property. Upon review, the Supreme Court held that the property subject to this suit was simultaneously used for exempt “industrial processing” activity under MCL 205.94o(7)(a) and nonexempt “distribution” and “shipping” activities under MCL 205.94o(6)(b). In these circumstances, the taxpayer was entitled to the industrial-processing exemption based on the “percentage of exempt use to total use determined by a reasonable formula or method approved by the department [of Treasury].” MCL 205.94o(2). Accordingly, the Court affirmed the judgment of the Court of Appeals in part, reversed in part, and remanded to the Court of Claims for further proceedings. View "Detroit Edison Co. v. Dept. of Treasury" on Justia Law

n consolidated appeals, the issue central to all that was presented for the Supreme Court's review was whether petitioners, who sold their principal residences in arm’s-length transactions, were entitled to refunds of the real estate transfer tax under the real estate transfer tax exemption set forth in MCL 207.526(u) when the state equalized value of the properties at the time of sale was less than it was at the time of their original purchases. The Court held that petitioners were entitled to refunds under the real estate transfer tax exemption in these circumstances. The Court of Appeals was reversed and the cases remanded to the Tax Tribunal for further proceedings, including reinstatement of its judgments in favor of petitioners. View "Gardner v. Dept. of Treasury" on Justia Law

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

This case began as a dispute between the parties regarding whether plaintiff owed tax under the now-repealed Single Business Tax Act (SBTA) related to plaintiff's contributions to its Voluntary Employees' Beneficiary Association (VEBA) trust fund for 1997 through 2001. In this case, the issue for the Supreme Court to decide was what actions a taxpayer must take under MCL 205.30 of the Revenue Act to trigger the accrual of interest on a tax refund. The Court held that in order to trigger the accrual of interest, the plain language of the statute requires a taxpayer to: (1) pay the disputed tax; (2) make a “claim” or "petition" for a refund; and (3) "file" the claim or petition. "Although a "claim" or "petition" need not take any specific form, it must clearly demand, request, or assert a right to a refund of tax payments made to the Department of Treasury that the taxpayer asserts are not due. Additionally, in order to "file" the claim or petition, a taxpayer must submit the claim to the Treasury in a manner sufficient to provide the Treasury with adequate notice of the taxpayer’s claim." View "Ford Motor Co. v. Dept. of Treasury" on Justia Law

Andrie Inc. brought an action in the Court of Claims, seeking a refund of use taxes it had paid under protest for the years 1999 through 2006 after an audit by the Department of Treasury determined that Andrie had understated the taxes it owed for that period under the Use Tax Act (UTA). In order to be entitled to the exemption from the use tax, a taxpayer must show that the sales tax was both due and paid on the sale of that tangible personal property. Because Andrie did not submit any evidence that sales tax had been paid, Andrie was not entitled to the use tax exemption. The Court of Appeals judgment was reversed to the extent it held that the use tax could never be levied on property if the purchase of that property was subject to sales tax. View "Andrie, Inc. v. Dept. of Tresasury" on Justia Law