Henderson v. Department of Treasury
307 Mich. App. 1
| Mich. Ct. App. | 2014Background
- Petitioner, a Florida resident, challenged a Notice dated Oct 18, 2011 alleging liability under Michigan's former SBT for 2007 taxes as a corporate officer of Jefferson Beach Properties, LLC.
- Respondent moved for summary disposition under MCL 205.27a(5), asserting corporate officer liability and that SBT was nondischargeable.
- MTT granted summary disposition; petitioner's amendments and discovery disputes were unresolved at final order.
- MTT ultimately held the SBT nondischargeable as an excise tax under 11 USC 507(a)(8)(E).
- Petitioner argued the liability was discharged in Florida bankruptcy; court analyzed whether SBT is an excise tax and the officer liability statute.
- 2014 PA 3 later amended officer liability definitions, but the court denied remand based on those changes.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is the SBT an excise tax dischargeable in bankruptcy? | Petitioner contends SBT is not an excise tax. | Respondent argues SBT is an excise tax not discharged by bankruptcy. | SBT is an excise tax not dischargeable under § 507(a)(8)(E)(i). |
| Did MTT err by denying amendment of pleadings? | Petitioner asserts right to amend under MCR 2.116(I)(5) was not properly protected. | Respondent maintains no error; amendment not justified. | MTT properly applied MCR 2.116(I)(5); no error in limiting amendments. |
| Did MTT abuse discovery rights or deny due process? | Petitioner claims a promised discovery opportunity was denied. | MTT properly closed discovery pending final order; no due process violation. | MTT did not abuse discretion; discovery closure was permissible. |
| Whether derivative corporate-officer liability under MCL 205.27a(5) is for taxes (not dischargeable) or for a non-tax debt? | Argued liability is derivative and dischargeable. | Liability is for taxes, not dischargeable. | Liability under 205.27a(5) is for taxes, not discharged, |
| Retroactive effect of 2014 PA 3 on the issues? | PA 3 retroactivity could affect who is a ‘responsible person’ and proof standards. | PA 3 retroactivity but does not alter the issues framed for appeal. | PA 3 retroactivity acknowledged; issues on remand not altered by amendment. |
Key Cases Cited
- Stockier v Dep't of Treasury, 75 Mich App 640 (Mich. Ct. App. 1977) (SBT not an income tax; SBT as a privilege tax)
- Dooley v Detroit, 370 Mich 194 (Supreme Ct. 1963) (excise tax definitions and broad excise concept)
- Trinova Corp v Dep’t of Treasury, 433 Mich 141 (Mich. 1989) (applies tax base characterization; excise vs ad valorem context)
- Nat’l Steel Corp v Mich Dep’t of Treasury, 498 U.S. 358 (U.S. 1991) (excise tax scope; transaction-based taxation under bankruptcy statute)