Michigan

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The Michigan Department of Treasury issued a Revenue Administrative Bulletin (RAB) describing the taxation of computer software and digital products to reflect updated case law and legislation enacted in 2004, which, among other things, defined “tangible personal property” to include “prewritten computer software.” The RAB provides that the “key feature” in determining whether prewritten software…

On January 19, 2023, the Michigan Court of Appeals held that a taxpayer, transitioning from the Michigan Business Tax (MBT) to the Corporate Income Tax (CIT), cannot claim prior MBT business losses on its first CIT return. For tax years 2008 through 2011, the taxpayer filed MBT tax returns and claimed employment tax credits. In…

The Michigan Court of Appeals reaffirmed its March 2020 decision that application of the state’s statutory apportionment formula was unconstitutionally distortive as applied to a taxpayer’s Michigan Business Tax (MBT) liability. The Michigan Supreme Court vacated and remanded the Court of Appeals’ March 2020 decision, which was the topic of a prior SALT Shaker post…

On July 8, 2021, the Michigan Court of Appeals issued a decision holding that a retailer was not subject to use tax on advertising materials mailed to Michigan residents. The retailer designed the materials in-house and had them printed by a third-party printer, outside of Michigan. After printing, the retailer sent the materials to a…

The Michigan Supreme Court held that sales of bottle and can recycling machines that help retailers comply with Michigan’s bottle-deposit law may qualify for the state’s sales and use tax exemption applicable to machinery used in an industrial-processing activity.  The Michigan Department of Treasury unsuccessfully argued that the machines may not qualify for the exemption…

The Michigan Supreme Court held that revenue from the performance of services must be sourced to the location where the service provider’s employees performed the work, not where the services were delivered, for purposes of the City of Detroit’s income tax. Detroit imposes an income tax under the Uniform City Income Tax Ordinance (“UCITO”), which…

The Michigan Court of Appeals reversed and vacated the Tax Tribunal’s order and held that merged entities that are a unitary business group (“UBG”) must be treated as single entity for purposes of calculating the franchise tax and that corporate income tax credits carried over to the new entity. The taxpayer, Comerica, Inc., was a…

The Michigan Court of Appeals recently held that the state’s statutory apportionment formula was unconstitutionally distortive as applied to a taxpayer’s Michigan Business Tax (MBT) liability. Therefore, the taxpayer was entitled to use an alternative formula. The court noted that this is an exceptional case where the taxpayer met its burden to show that the…