955 N.W.2d 593
Mich. Ct. App.2020Background:
- Petitioner (Comerica, Inc.) owned a Michigan state‑chartered bank (Comerica‑Michigan) and formed a Texas banking association (Comerica‑Texas); on October 31, 2008 Comerica‑Michigan merged into Comerica‑Texas and ceased to exist.
- Comerica filed Michigan Business Tax returns for 2008–2011 including Comerica‑Texas as a UBG member and claimed SBTA tax credits previously earned by Comerica‑Michigan; petitioner sought refunds.
- Treasury audited, reduced the refunds, and (1) calculated net capital treating Comerica‑Michigan and Comerica‑Texas as separate entities for averaging, and (2) disallowed Comerica‑Texas’s use of Comerica‑Michigan’s previously assigned tax credits (claiming credits can be assigned only once).
- The Michigan Tax Tribunal granted partial summary disposition to petitioner on the net‑capital calculation but upheld Treasury’s disallowance of the credits; tribunal concluded the credits could not transfer because assignment rules had been exhausted.
- On appeal the Court vacated the tribunal’s net‑capital disposition and remanded for recalculation consistent with prior precedent for UBG averaging, and reversed the tribunal on the tax‑credit issue, holding that credits transferred by operation of law in the merger and were not barred by the SBTA single‑assignment rule.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Proper method to calculate net capital for a unitary business group (UBG) after a member merger | Apply the MBTA averaging formula in accordance with UBG precedent (treat the group consistently so Comerica‑TX’s post‑merger net capital and applicable historical amounts are used) | Must account for Comerica‑Michigan’s pre‑merger net capital separately under MCL 208.1265 averaging; respondent’s calculation was correct | Tribunal’s net‑capital order vacated; remand for recalculation consistent with this Court’s UBG averaging precedent (Treasury’s original calculation was erroneous) |
| Whether SBTA single‑assignment rule bars transfer of previously assigned tax credits to successor via merger (operation of law) | Credits transferred by operation of law under the banking merger statute and are not subject to SBTA’s single‑assignment prohibition (which addresses assignments only) | SBTA permits only one assignment of credits; because credits had been assigned earlier they cannot be transferred to Comerica‑TX | Reversed tribunal and Treasury: single‑assignment limit applies only to assignments; credits are property that transferred automatically by operation of law in the merger and therefore are not barred |
Key Cases Cited
- Briggs Tax Serv., LLC v. Detroit Pub. Sch., 485 Mich 69 (2010) (standard of appellate review for Tax Tribunal decisions)
- West v. General Motors Corp., 469 Mich 177 (2003) (summary‑disposition standard under MCR 2.116(C)(10))
- Kim v. JPMorgan Chase Bank, N.A., 493 Mich 98 (2012) (distinguishes transfers by assignment from transfers by operation of law; operation of law occurs without affirmative act by transferee)
- Hudsonville Creamery & Ice Cream Co., LLC v. Dep’t of Treasury, 314 Mich App 726 (2016) (statutory‑interpretation principles in tax context)
- Gen Motors Corp. v. Dep’t of Treasury, 290 Mich App 355 (2010) (tax refund claims as expectations in certain contexts)
- Auto‑Owners Ins. Co. v. Dep’t of Treasury, 226 Mich App 618 (1997) (tax credit statutes construed in favor of taxing unit but ordinary statutory construction applies)