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
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Michigan Tax Tribunal to Consider City Income Tax Nexus in Light of Wayfair
By Alla Raykin & Eric Tresh on
Posted in In the News, Noteworthy Cases
The Michigan Court of Appeals remanded a case on whether Detroit may impose its income tax on an out of state taxpayer, in light of the US Supreme Court’s Wayfair ruling. The Michigan Court of Appeals previously upheld the Tax Tribunal’s decision that the taxpayer lacked sufficient nexus with Detroit to be subject to its…
Michigan Court of Appeals Holds that Use Tax is Due on Phones Given to Customers
By Justin Brown & Ted Friedman on
Posted in In the News
On February 12, 2019, the Michigan Court of Appeals upheld the imposition of use tax on phones that were given away for no charge by a company in conjunction with its sale of mobile phone service contracts. The company sold service contracts for a single mobile phone service provider and also purchased phones from the…
Sixth Circuit Holds that Federal Courts Had No Jurisdiction over Property Owners’ Constitutional Challenge to Foreclosure Sale
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Posted in Noteworthy Cases, Policy and Legislation
By Chris Lutz and Charlie Kearns
On February 10, 2017, the US Court of Appeals for the Sixth Circuit held in Wayside Church v. Van Buren County, 847 F.3d 812 (U.S. 6th Cir. 2017) that the Tax Injunction Act (TIA) and the principle of comity barred federal courts from hearing the taxpayers’ arguments…
Check Your Michigan Unitary Group Filings–LaBelle Is Final
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Posted in Noteworthy Cases, Policy and Legislation
Last week, the Michigan Department of Treasury issued a Notice to Taxpayers explaining its approach in administering the now final Michigan Court of Appeals decision in LaBelle Management, Inc. v. Department of Treasury, 888 N.W.2d 260 (Mich. Ct. App. 2016), leave to appeal denied by 889 N.W.2d 250 (Mich. 2017) (mem.). The Court invalidated…
Michigan Court of Appeals Determines Pre-Assessment Collection of Tax Not Barred By Statute of Limitations
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Posted in Noteworthy Cases, Policy and Legislation
By Doug Upton and Madison Barnett
The Michigan Court of Appeals held that a taxpayer was precluded from recovering sales tax it voluntary paid in response to a preliminary audit determination, even though assessment of the tax may have otherwise been barred under the four-year statute of limitations. The court reasoned that a preliminary audit…
Michigan Supreme Court Denies Tax Compact Appeal
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Posted in Noteworthy Cases
By Chris Mehrmann and Open Weaver Banks
The Michigan Supreme Court denied an application for leave to appeal a Michigan Court of Appeals decision that sanctioned the Michigan’s Legislature’s retroactive withdrawal from the Multistate Tax Compact. The court summarily denied the appeal—which was filed by Harley Davidson Motor Company, Inc. and 13 other taxpayers—explaining that…
It’s Plain (and Ordinary) to See: Michigan Court of Appeals Holds Unitary Business Group Does Not Exist
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Posted in Noteworthy Cases, Policy and Legislation
By Ted Friedman and Leah Robinson
The Michigan Court of Appeals reversed a trial court ruling and held that three companies did not constitute a statutorily defined “unitary business group” for Michigan Business Tax (MBT) purposes. It was undisputed that there was insufficient “direct” ownership among the companies to give rise to a “unitary business…
SBT Taxpayer Win in Michigan Compact Cases
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Posted in Noteworthy Cases, Policy and Legislation
By Samantha Trencs and Eric Tresh
The Michigan Court of Appeals held that the mandatory apportionment provision of the Michigan Single Business Tax Act did not impliedly repeal Michigan’s enactment of the Multistate Tax Compact’s alternative apportionment election provision. In addition, the court held that the Single Business Tax (SBT) was an income tax under…
New Michigan Law Exempts Certain Data Center Equipment Purchases from Sales and Use Taxes as of January 1, 2016
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Posted in Digital Economy, Policy and Legislation
By Evan Hamme and Charlie Kearns
Purchases of “data center equipment for assembly, use, or consumption in the operations of a qualified data center” on or after January 1, 2016, are exempt from Michigan sales and use tax. M.C.L. §§ 205.54ee, 205.94cc; see generally Notice Regarding Data Center Exemption, Feb. 5, 2016…