ALAN L WISNE V DEPT OF TREASURY
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STATE OF MICHIGAN
COURT OF APPEALS
ALAN L. WISNE and KATHRYN L. WISNE,
UNPUBLISHED
May 20, 2008
Petitioners-Appellants,
v
MICHIGAN DEPARTMENT OF TREASURY,
No. 270633
Michigan Tax Tribunal
LC No. 00-297661
Respondent-Appellee.
Before: Owens, P.J., and White and Murray, JJ.
MURRAY, J. (dissenting).
With due respect to my esteemed colleagues, I would affirm the Michigan Tax Tribunal’s
decision to impose a 25% penalty on petitioners for the intentional disregard of the law. MCL
205.23(4).
As the majority recognizes, petitioners had a responsibility under the law to pay an
estimated tax due when seeking an extension. MCL 206.311(2). A deficiency in the estimated
tax payment “is characterized as a ‘tax due’ or present obligation, and a taxpayer is held
accountable for any tax deficiency, interest, and penalties even though the deficiency is not
realized until completion of the final return.” STC Inc v Dep’t of Treasury, 257 Mich App 528,
535; 669 NW2d 594 (2003).
The Tribunal’s decision that petitioners intentionally disregarded the law was based on
the fact that petitioners submitted $100 for their estimated tax, taking the position that nonresidents did not have to pay tax on the net profits on the sale of their S corporation. The
Tribunal’s decision was not based on an error of law, and its factual finding was supported by
substantial evidence. STC Ins, supra at 533. Consequently, it should be affirmed.
“Intentional disregard” is not defined by statute, so resort to a dictionary definition is
appropriate. Halloran v Bhan, 470 Mich 572, 578; 683 NW2d 129 (2004). “Disregard” means
to “treat as unworthy of regard or notice.” Webster’s New Collegiate Dictionary (1980). Thus,
“intentional disregard” of the law means to intentionally treat a law as unworthy of regard or
notice. As the Tribunal noted, at the time the petitioners filed their request for extension in 1999,
the following legal landscape existed regarding a non-resident being subject to taxation on the
net profit from the sale of an S corporation:
-1-
1.
The 1990 amendment to MCL 206.110, passed nine years earlier, which
eliminated “unincorporated” from the statute, thus including S
corporations within its provisions.
2.
A 1990 legislative analysis of the bill that was to become the 1990
amendment indicated that the amendment’s purpose was to make clear
that a non-resident’s net profit from an S corporation was taxable to
Michigan.
3.
n both Bachman v Dep’t of Treasury, 215 Mich App 174, 180-182; 544
I
NW2d 733 (1996) and Alma Piston Co v Dep’t of Treasury, 236 Mich
App 365, 366-367; 600 NW2d 144 (1999), this Court indicated in dicta
that “as amended, § 110(2)(b) clearly imposes tax liability on petitioners
non-resident shareholders for their distributive shares.”1
4.
On May 4, 1998, the Tribunal rejected petitioner Alan Wisne’s father’s
argument that non-residents were exempt even after adoption of the 1990
amendment.
Hence, at the time of their filing, petitioners had to (A) disregard (1) clear statutory language and
legislative history, (2) statements in published cases from our Court, and (3) a ruling from the
Tribunal, all of which indicated that petitioner’s position was incorrect, and (B) instead proceed
with the view that no estimated tax was owed because the amended statute did not apply to nonresidents’ profits from S corporations. In my view, however, the writing was on the wall as to
the taxation issue, and the tribunal’s conclusion that petitioners’ decision making constituted an
intentional disregard of the law was not in error. Consequently, I would affirm the Tribunal’s
position of a penalty.
/s/ Christopher M. Murray
1
Although the statements in both cases were dicta, the statements should have been considered
persuasive. Carr v City of Lansing, 259 Mich App 376, 383-384; 674 NW2d 168 (2003).
Additionally, because the language and intent behind the amendment were so clear, petitioners
cannot argue that the law was sufficiently uncertain until a published case decided the issue.
-2-
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