D'Agostini Land Company LLC v. Department of Treasury
322 Mich. App. 545
| Mich. Ct. App. | 2018Background
- D’Agostini Land Co., LLC was the designated representative of a unitary business group that filed MBT returns for 2009–2011 and claimed the MBT small business alternative credit for 2009 and 2010.
- The unitary group met the MBT thresholds for gross receipts and adjusted net income, but one member (an S corporation) received more than $180,000 as a distributive share.
- The Michigan Department of Treasury disallowed the credit, following its guidance that a member’s disqualifying compensation prevents the whole unitary group from claiming the credit.
- D’Agostini appealed to the Tax Tribunal; the Tribunal granted summary disposition for Treasury and denied reconsideration. D’Agostini appealed to the Court of Appeals.
- The core legal question: whether the MBT’s small business alternative credit disqualifiers apply to a unitary business group when the disqualifying language does not expressly list "unitary business group."
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a unitary business group is subject to the MBT credit disqualifiers | The statute permits "any taxpayer" to claim the credit and the disqualifying subsections list specific taxpayer types; because "unitary business group" is not listed, it is not disqualified | Treasury contends the disqualifiers apply to unitary groups by virtue of their members; agency guidance so treats unitary groups as subject to disqualifiers | Court held unitary business groups are not disqualified under MBT because the statute’s disqualifying subsections do not list them; reversed Tribunal |
| Whether the Court should defer to Treasury’s past interpretations and Tribunal precedent | D’Agostini argued plain statutory text controls and agency guidance cannot expand statutory scope | Treasury urged respectful consideration of agency interpretation and prior Tribunal decisions applying similar concepts | Court gave limited weight to agency guidance but relied on plain meaning and statutory drafting changes to reject Treasury’s interpretation |
| Whether statutory construction supports treating unitary groups as disqualified given later legislative change in the CIT | N/A (Plaintiff argued textual absence controls) | Treasury implied policy supports treating groups like single entities for disqualification | Court applied the canon that later inclusion of "unitary business group" in the CIT indicates the MBT’s omission was intentional, supporting plaintiff |
| Preservation of challenge to unitary-group status under Labelle Mgt | D’Agostini sought reevaluation of unitary-group status | Treasury argued the challenge was unpreserved | Court found the challenge unpreserved and declined to reach it |
Key Cases Cited
- Labelle Mgt, Inc. v. Dep’t of Treasury, 315 Mich. App. 23 (interpretation of unitary business group issues)
- Briggs Tax Serv., LLC v. Detroit Pub. Sch., 485 Mich. 69 (standard of review for Tax Tribunal legal conclusions)
- Van Buren Cty Educ. Ass’n v. Decatur Pub. Sch., 309 Mich. App. 630 (legislative intent and statutory interpretation)
- Lorencz v. Ford Motor Co., 439 Mich. 370 (plain meaning rule)
- People v. Fawaz, 299 Mich. App. 55 (when a statute is ambiguous)
- Borchard-Ruhland, 460 Mich. 278 (canons of construction for ambiguous statutes)
- In re Complaint of Rovas, 482 Mich. 90 (deference to agency interpretations)
- Ray v. Swager, 501 Mich. 52 (presumption that legislative change signals substantive change)
- People v. Wright, 432 Mich. 84 (same canon regarding legislative change)
- Wismer v. Becker Contracting Eng’rs v. Dep’t of Treasury, 146 Mich. App. 690 (courts must apply statutory text; not supply omitted language)
- Alliance Obstetrics & Gynecology, PLC v. Michigan Dep’t of Treasury, 285 Mich. App. 284 (Treasury letter-ruling context cited for treatment of taxpayers not listed in disqualifiers)