ASAMA COLDWATER MANUFACTURING INC V DEPARTMENT OF TREASURY
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STATE OF MICHIGAN
COURT OF APPEALS
ASAMA COLDWATER MANUFACTURING,
INC.,
UNPUBLISHED
June 8, 2010
Plaintiff-Appellee,
v
No. 290584
Court of Claims
LC No. 08-000054-MT
DEPARTMENT OF TREASURY,
Defendant-Appellant.
Before: OWENS, P.J., and O’CONNELL and TALBOT, JJ.
PER CURIAM.
Defendant appeals as of right from the trial court’s order granting plaintiff’s motion for
summary disposition. For the reasons stated below, we reverse and remand for further
proceedings. This appeal has been decided without oral argument pursuant to MCR 7.214(E).
Plaintiff is a corporation based in Coldwater. In 1998, plaintiff became eligible for tax
credit under the Michigan Economic Growth Authority Act, MCL 207.801 et seq., administered
by the Michigan Economic Development Corporation (MEDC) through its Michigan Economic
Growth Authority Board (MEGA). Under the Act, a business can receive a credit applicable to
its liability under the Single Business Tax Act (SBTA), MCL 208.1 et seq.1 To become eligible,
the business and MEGA enter into a contract setting forth the number of new jobs the business
must create, and other particulars. Plaintiff and MEGA entered into such a contract. Plaintiff
claimed the credit on its 1998 single business tax (SBT) return, but it did not in the years after
that apply to MEGA for certification for the credit. Years later, plaintiff sought certification
from MEGA for tax years 2000 through 2004, and on January 22, 2007, MEGA issued the
certificates, even though the application was not timely under the parties’ agreement. In
February 2007, plaintiff submitted amended SBT returns for those years and, because plaintiff
did not owe any SBT for those years, the returns indicated that the credit amount should be paid
to plaintiff.
1
Repealed for tax years after 2007 by 2006 PA 325, § 1.
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Defendant rejected the request for the tax years 2000, 2001, and 2002, finding that a fouryear statute of limitations provided by the revenue act, MCL 205.1 et seq., applied to bar refunds
for those years. The refunds for 2003 and 2004 were granted. Plaintiff sought an informal
conference to contest defendant’s decision. The referee agreed with defendant, and plaintiff
appealed to the Court of Claims.
Plaintiff moved for summary disposition under MCR 2.116(C)(9) (failure to state a valid
defense). Plaintiff argued that MEGA had waived any right to enforce the contractual deadline;
that because only MEGA has the authority to grant the credits, defendant has no authority to
enforce the statute of limitations; that the Legislature granted MEGA the sole power to award
credits under the Act; that because the State Treasurer or its designee is by statute a member of
MEGA, MEGA’s approval of the late credit applications served as defendant’s waiver of the
statute of limitations defense; that the statute of limitations only applies to an “amount paid to the
department”; and that defendant’s refusal to perform the “ministerial function” of issuing the
refunds contravened public policy.
Defendant argued that the statutes clearly limited plaintiff’s refund to those tax years for
which refunds were already granted. Defendant did not dispute that MEGA approved the credit,
but contended that plaintiff was not entitled to a refund for years beyond the statute of
limitations. Defendant also noted that the State Treasurer is required by statute to participate in
MEGA and to administer the Revenue Act and that the MEGA statutes still require compliance
with the SBT in order to have the credit applied to its tax burden.
The court agreed with plaintiff that the timing was controlled by the fact that the parties’
contract extended for ten consecutive tax years, beginning with 1998. Because the certificates
were issued within the contract’s effective period, defendant was required to honor the certificate
and grant the refund. Plaintiff had performed as required under the contract, and so defendant
had to honor the contract as written. The trial court granted summary disposition in favor of
plaintiff.
We review de novo a trial court’s decision to grant or deny a motion for summary
disposition. Spiek v Dep’t of Transportation, 456 Mich 331, 337; 572 NW2d 201 (1998).
Statutory interpretation and other questions of law are also considered de novo on appeal.
Detroit v Ambassador Bridge Co, 481 Mich 29, 35; 748 NW2d 221 (2008); Anzaldua v Band,
457 Mich 530, 533; 578 NW2d 306 (1998).
We disagree with the Court of Claims’ conclusion that contract law applies here. Under
the MEGA Act, businesses satisfying their MEGA contracts are “rewarded” not with cash but
with a tax credit to be applied to their SBT tax liability. Specifically, under the MEGA Act
statutes, “eligible” businesses (those that retain or create jobs in manufacturing, mining,
wholesale and trade, office operations, or high-tech) seek authorization from MEGA by entering
into “a written agreement for a tax credit under section 9” of the Act. MCL 207.803, MCL
207.807, MCL 207.808. In addition, MCL 207.809, provides:
(1) An authorized business is eligible for the credits provided in sections
37c, 37d, and 38g(19) to (24) of the single business tax act, 1975 PA 228, MCL
208.37c, 208.37d, and 208.38g, and sections 407 and 431 of the Michigan
business tax act, 2007 PA 36, MCL 208.1407 and 208.1431.
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(2) The authority shall issue a certificate each year to an authorized
business that states the following:
(a) That the eligible business is an authorized business.
(b) The amount of the tax credit for the designated tax year.
(c) The taxpayer’s federal employer identification number or the Michigan
treasury number assigned to the taxpayer.
The SBTA is expressly referenced as providing the credits for which businesses authorized under
MEGA are eligible. The sections referenced provide, in relevant part:
MCL 208.37c (emphasis added):
(1) For tax years beginning after December 31, 1994 and for a period of
time not to exceed 20 years as determined by the Michigan economic growth
authority, a taxpayer that is an authorized business may credit against the tax
imposed by section 31 the amount certified each year by the Michigan economic
growth authority.
(2) The credit allowed under subsection (1) for an authorized business for
the tax year as determined under the Michigan economic growth authority act,
1995 PA 24, MCL 207.801 to 207.810, shall not exceed the payroll of the
authorized business attributable to employees who perform qualified new jobs
multiplied by the tax rate.
(3) A taxpayer shall not claim a credit under this section unless the
Michigan economic growth authority has issued a certificate to the taxpayer. The
taxpayer shall attach the certificate to the return filed under this act on which a
credit under this section is claimed.
(4) The certificate required by subsection (3) shall state all of the
following:
(a) The taxpayer is an authorized business.
(b) The amount of the credit under this section for the authorized business
for the designated tax year.
(c) The taxpayer's federal employer identification number or the Michigan
treasury number assigned to the taxpayer.
(d) For a taxpayer that claims a credit allowed under subsection (10), the
taxpayer is a distressed business.
(5) If the credit allowed under subsection (1) exceeds the tax liability of
the taxpayer for the tax year, the excess shall be refunded to the taxpayer.
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MCL 208.37d (emphasis added):
(1) For tax years beginning after December 31, 1994, and for a period of
time not to exceed 20 years as determined by the Michigan economic growth
authority plus any carryforward years allowed under subsection (5), a taxpayer
that is an authorized business may credit against the tax imposed by section 31 an
amount equal to the tax liability attributable to authorized business activity.
(2) A taxpayer shall not claim a credit under this section unless the
Michigan economic growth authority has issued a certificate to the taxpayer. The
taxpayer shall attach the certificate to the return filed under this act on which a
credit under this section is claimed.
(3) The certificate required by subsection (2) shall state all of the
following:
(a) The taxpayer is an authorized business.
(b) The amount of the credit under this section for the authorized business
for the designated tax year.
(c) The taxpayer’s federal employer identification number or the Michigan
treasury number assigned.
***
(5) If the credit allowed under this section for the tax year and any unused
carryforward of the credit allowed by this section exceed the taxpayer’s tax
liability for the tax year, that portion that exceeds the tax liability for the tax year
shall not be refunded but may be carried forward to offset tax liability in
subsequent tax years for 10 years or until used up, whichever occurs first.
The other referenced sections of the SBTA do not apply here, and the recently enacted Michigan
Business Tax Act does not apply; nonetheless those statutes include similar provisions for
applying the tax credit to the taxpayer’s tax liability. The MEGA Act has no other provision for
an authorized business to be paid directly or to receive a tax credit any way besides as provided
in the SBTA. Plaintiff could only apply the credit to its annual SBT liability, and either receive
the excess as a refund or carry it forward.
The SBTA further provides that it is administered by the State Treasurer pursuant to the
Revenue Act. MCL 208.80(1). That means the procedures for filing returns, paying tax owed,
seeking credits and refunds are those set forth in the Revenue Act. In relevant part, those statutes
provide:
MCL 205.30(2) (emphasis added):
A taxpayer who paid a tax that the taxpayer claims is not due may petition
the department for refund of the amount paid within the time period specified as
the statute of limitations in section 27a. If a tax return reflects an overpayment or
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credits in excess of the tax, the declaration of that fact on the return constitutes a
claim for refund . . . .
MCL 205.27a:
(2) . . . The taxpayer shall not claim a refund of any amount paid to the
department after the expiration of 4 years after the date set for the filing of the
original return . . . .
(3) The running of the statute of limitations is suspended for the following:
(a) The period pending a final determination of tax, including
audit, conference, hearing, and litigation of liability for federal income tax
or a tax administered by the department and for 1 year after that period.
(b) The period for which the taxpayer and the state treasurer have
consented to in writing that the period be extended.
(4) The running of the statute of limitations is suspended only as to those
items that were the subject of the audit, conference, hearing, or litigation for
federal income tax or a tax administered by the department.
Plaintiff does not argue that any of the suspension provisions apply, nor does the record indicate
any reason why they would apply. There does not seem to be any dispute that plaintiff filed
returns in the years at issue. Had plaintiff timely applied the credits to its annual returns, the
returns would have reflected “credits in excess of the tax,” which by the plain language of MCL
205.30(2) equals a claim for a refund. Then, under MCL 205.27a(2), plaintiff had four years
from the due date of each return to seek the refund.
Plaintiff argues that because its net SBT liability meant no taxes were owed, then it could
not have been a “taxpayer who paid a tax” and the four-year limit does not apply. This argument
is without merit. The “taxpayer who paid a tax” sentence does not need to apply to plaintiff; the
next sentence imposes the four-year limit. As a business authorized by MEGA, plaintiff must
have been subject to the SBTA. Even if the tax it owed was zero, the credits would be “in excess
of the tax.”
Finally, we find that plaintiff’s public policy arguments, even if appropriate, also fail.
Plaintiff could easily have had its refund had it simply submitted the credit on time.
We reverse and remand for further proceedings consistent with this opinion. We do not
retain jurisdiction.
/s/ Donald S. Owens
/s/ Peter D. O’Connell
/s/ Michael J. Talbot
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