Michigan Taxes

SALES AND USE TAX—Officer liability.

In a case involving officer liability for a corporation's tax liabilities, the Tax Tribunal erred in granting the taxpayer's motion for summary judgment because the Tribunal raised an issue not presented by the parties and then it did not allow the Department of Treasury an opportunity to present evidence. The Tribunal also erred in denying the Department's motion for reconsideration when it held that the new evidence presented by the Department was insufficient and would not change the outcome of its original order. The appeals court found the Department provided sufficient evidence to establish its prima facie case that the taxpayer was a liable corporate officer with some extent of control or supervisory authority over the corporation's return or payment of taxes, as required by Mich. Comp. Laws Ann. §205.27a(5). The statute does not require that a corporate officer have exclusive authority for all tax affairs of a corporation for derivative liability to apply; instead, a corporate officer can be held derivatively liable even if he has only supervisory authority over filing and remitting a corporation's tax returns. Nevertheless, whether the taxpayer had the requisite “control or supervision of, or responsibility for, making the returns or payments” of the corporation's taxes that would subject him to liability is a genuine issue of material fact that precludes summary disposition. Finally, the question presented at the Tribunal—whether the release of a corporation through bankruptcy proceedings eliminates corporate officer liability—was of sufficient importance to reject granting summary judgment in the case. (William F. Rolinski v. Michigan Department of Treasury, Mich. Ct. App., Dkt. No. 291667, 10/05/2010 (unpublished).)

PROPERTY—Failure to exchange information with township.

The Tax Tribunal properly dismissed the taxpayers' property valuation appeals when the taxpayers repeatedly failed to file and exchange their valuation disclosures, witness lists, and exhibit lists. The Tax Tribunal rules clearly allow the Tribunal either to schedule a default hearing or to dismiss the case. Here, there would have been no point in conducting a default hearing, because the taxpayers had not submitted any evidence whatsoever. The Tax Tribunal also did not err in failing to grant the taxpayers' requests for subpoenas to a bank officer to produce alleged appraisals of the subject properties because they did not file their motions for subpoenas until after the default orders were entered, and until after the deadline had passed for their motions to set aside the default orders. Finally, the Tribunal's dismissal without conducting a show-cause hearing did not violate due process. Since the taxpayers did not make this argument to the Tribunal it was not preserved on appeal. In any event, procedural due process was provided to the taxpayers since they were given sufficient notice and an opportunity to be heard. (Sal-Mar Industrial Corp., et al. v. Township of Macomb, Mich. Ct. App., Dkt. Nos. 291843; 291844; 294151; 294339, 10/05/2010 (unpublished).)

PROPERTY—Conveyance from partnerships to individual partners.

The conveyance of property from two partnerships to the individual partners was a transfer of ownership and so the township could reassess and raise the properties' taxable value. All of the property was owned by two partnerships, which deeded the parcels to one or the other of the individual partners and their spouses. The Michigan Constitution and statutory law allow real property's taxable value to be reassessed according to the following year's state equalized value upon the sale or transfer of the property (“uncapping” the taxable value). The property at issue was conveyed by deed and so the conveyance was a “transfer of ownership” under Mich. Comp. Laws Ann. §211.27a(6)(a). The statute unambiguously identifies the types of conveyances that do not trigger uncapping, and conveyances involving tenancies in partnership, like the ones in this case, are not among those listed. The joint tenancy exception in Mich. Comp. Laws Ann. §211.27a(7)(h) does not apply. Although joint tenancies and tenancies in partnership are similar, they remain legally distinct forms of ownership, and the Uniform, Partnership Act does not identify property held by a partnership as property held in “joint tenancy.” (Theodore H. Schwass, et. al. v. Township of Riverton, Mich. Ct. App., Dkt. No. 292737, 09/30/2010.)