Fradco, Inc. v. Department of Treasury
495 Mich. 104
| Mich. | 2014Background
- Fradco and SMK are Michigan corporations audited by the Department of Treasury; each had appointed a CPA as an official representative via written power of attorney requesting copies of department notices.
- The department issued final assessments dated on their faces (Fradco: Sept. 17, 2009; SMK: June 15, 2010) but initially sent those assessments only to the taxpayers (or otherwise failed to send copies to the designated representatives).
- In both cases the taxpayers’ representatives later inquired and only received copies of the final assessments weeks to months after the issuance dates printed on the assessments.
- Each taxpayer filed a late Tax Tribunal appeal measured from the printed issuance date; the department moved to dismiss for lack of jurisdiction under MCL 205.22(1) (35‑day appeal period).
- The Tax Tribunal and the Court of Appeals held that MCL 205.8 (notice to designated representatives) must be satisfied alongside MCL 205.28(1)(a) (notice to taxpayer) before the 35‑day appeal period begins. The Supreme Court granted review and consolidated the appeals.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the 35‑day appeal period begins when the department issues notice only to the taxpayer despite a validly appointed representative | Notice to the representative under MCL 205.8 is required; appeal period does not start until both taxpayer and representative receive statutorily required notices | The representative‑notice provision is non‑mandatory/merely a courtesy; only notice to the taxpayer (per MCL 205.28(1)(a) or the issuance date on the assessment) triggers the appeal period | The Court held that if a taxpayer appointed a representative, the department must notify both taxpayer and representative before the 35‑day appeal period begins. |
| Whether “issuance of the assessment” (which starts the appeal period) requires statutory notice to both taxpayer and representative | Issuance requires distribution of the final notice; because MCL 205.21(2)(f) equates final assessment with final notice, issuance is not complete until required notices (to taxpayer and representative) are sent | Issuance occurs when the assessment is dated/mailed to the taxpayer; compliance with representative notice is not a precondition to issuance | The Court held issuance is tied to statutory notice: both MCL 205.28(1)(a) and MCL 205.8 must be satisfied before an assessment is deemed issued for appeal‑period purposes. |
| Whether the department must prove actual receipt of notice by the taxpayer or representative to start the appeal period | The appeal period should run from the department’s compliance with the statutory mailing requirements (not actual receipt) | Department argued reliance on mailing/dating; may imply receipt matters | The Court held that actual receipt is not required; the appeal period begins when the department complies with MCL 205.28(1)(a) (personal service or certified mail to taxpayer) and sends a copy to the representative’s address designated under MCL 205.8. |
Key Cases Cited
- Browder v. Int’l Fidelity Ins. Co., 413 Mich 603 (1982) (use of “shall” indicates mandatory statutory duty)
- Sun Valley Foods Co. v. Ward, 460 Mich 230 (1999) (statutes dealing with same subject must be read in pari materia)
- Jennings v. Southwood, 446 Mich 125 (1994) (statutory provisions on same subject are read together to effect legislative purpose)
- World Book, Inc. v. Dep’t of Treasury, 459 Mich 403 (1999) (interpretive principles for reconciling tax statutes)
- Koontz v. Ameritech Servs., Inc., 466 Mich 304 (2002) (plain‑meaning statutory interpretation principles)