887 N.W.2d 641
Mich. Ct. App.2016Background
- Hudsonville Creamery invested in an approved brownfield project under the former SBTA and received $800,000 in brownfield redevelopment credits, most of which were unused in 2005–2007 and carried forward after SBTA repeal.
- The MBTA (effective for tax years after 2007) at MCL 208.1437(18) was later amended (2008 PA 89) to allow a taxpayer to elect an 85% refund of an excess "credit allowed under this section for the tax year," in exchange for forgoing the remaining 15% and any carryforward.
- Petitioner claimed a 2008 MBTA refund of $619,390 (85% of its remaining carryforward) after claiming a smaller MBTA credit that year; Treasury denied the refund, treating SBTA-origin carryforwards as nonrefundable.
- The Michigan Tax Tribunal granted summary disposition to the Department of Treasury, holding refunds were available only for credits earned in the tax year, not for carryforwards from SBTA.
- The Court of Appeals reversed: it held the ordinary meaning of "credit" (and IRS/26 U.S.C. §38 structure) includes carryforwards, and MCL 208.1437(18) expressly treats SBTA carryforwards as credits "claimable against the tax imposed under this act," so petitioner was entitled to the 85% refund.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether SBTA-origin carryforward credits qualify as a "credit allowed under this section" for purposes of MCL 208.1437(18)’s 85% refund option | Carryforwards are part of a year’s "credit"; statute and federal credit structure treat carryforwards as credits, so petitioner may elect 85% refund on carried credits | Refund provision omits the word "carryforward" (present earlier in subsection), so Legislature intended refunds only for credits attributable to the tax year, not SBTA carryforwards | Reversed MTT: carryforwards are encompassed in "credit allowed under this section," so petitioner entitled to 85% refund on its 2008 carried brownfield credits |
Key Cases Cited
- Spartan Stores, Inc. v. Grand Rapids, 307 Mich App 565 (court reviews MTT legal questions de novo)
- Briggs Tax Serv., LLC v. Detroit Pub. Sch., 485 Mich 69 (statutory interpretation principles)
- Mid-American Energy Co. v. Dep’t of Treasury, 308 Mich App 362 (read statute as whole; give ordinary meaning)
- Ashley Capital, LLC v. Dep’t of Treasury, 314 Mich App 1 (carryforward credits from SBTA treated as credits under MBTA)
- Jenkins v. Patel, 471 Mich 158 (avoid rendering statutory language nugatory)