ED VOGLER & SONS INC V DEPT OF TREASURY
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STATE OF MICHIGAN
COURT OF APPEALS
ED VOGLER & SONS, INC.,
UNPUBLISHED
November 10, 2005
Petitioner-Appellee,
v
No. 254761
Tax Tribunal
LC No. 00-287578
DEPARTMENT OF TREASURY,
Respondent-Appellant.
Before: Gage, P.J., and Hoekstra and Murray, JJ.
PER CURIAM.
Respondent appeals as of right from an opinion and judgment of the Michigan Tax
Tribunal that reduced the amount of an assessment from $28,581 plus interest to $1,661.96 plus
interest. The dispute stems from petitioner’s practice of offering a discount to credit customers
for paying their balance promptly. The parties disagreed concerning how the discount affected
petitioner’s sales tax liability. We affirm. This case is being decided without oral argument
pursuant to MCR 7.214(E).
“Issues concerning the interpretation and application of statutes are questions of law that
this Court decides de novo.” Danse Corp v Madison Heights, 466 Mich 175, 178; 644 NW2d
721 (2002). In the absence of fraud, this Court reviews a decision of the Tax Tribunal to
determine whether the tribunal erred in applying the law or adopted a wrong legal principle. Id.
The tribunal’s factual findings are conclusive if supported by competent, material, and
substantial evidence on the whole record. Id.
Respondent argues that when one of petitioner’s customers accepted a discount by paying
within the specified period, petitioner effectively collected sales tax based on the full amount of
the sale, but only remitted a portion of that amount to respondent. According to respondent,
petitioner was prohibited from enriching itself in this manner pursuant to MCL 205.73(4), which
provides that “[a] person other than the state may not enrich himself or herself or gain any
benefit from the collection or payment of the [sales] tax.” We disagree.
The type of discount offered by petitioner is essentially a cash discount of the type
offered by the retailer in Standard Oil Co v Michigan, 283 Mich 85; 276 NW 908 (1937.) There,
the retailer gave the buyer the option to pay either the invoice price or the invoice price less a
discount if paid within a specified period of time. The trial court concluded that if the buyer paid
the discount price within the period, the amount paid is the “gross proceeds” of the transaction.
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Id. at 88. The Supreme Court agreed, stating that in its “opinion a cash discount, if taken by the
customer, is no part of the ‘gross proceeds’ of a retail sale under the definition of ‘gross
proceeds’ as contained in [the General Sales Tax Act, MCL 205.51 et seq.].” Id. at 91.
As in Standard Oil, supra, when one of petitioner’s customers accepted a discount for
prompt payment, the amount of the discount was not part of the gross proceeds of the sale.
Although any reimbursement of tax from the customer must be remitted to the state, Sims v
Firestone Tire & Rubber Co, 397 Mich 469, 476; 245 NW2d 13 (1976), respondent’s argument
that petitioner failed to remit taxes that it collected assumes that the original amount of the tax
was unaffected by the discount. We conclude that the tribunal did not err in applying the law or
adopt a wrong legal principle when it rejected respondent’s position in this regard and
determined that petitioner was entitled to allocate the discount between the merchandise and the
sales tax so that it accurately reflected the gross proceeds and resulting tax liability.
Affirmed.
/s/ Hilda R. Gage
/s/ Joel P. Hoekstra
/s/ Christopher M. Murray
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