International Business MacHines Corp. v. Department of Treasury
496 Mich. 642
| Mich. | 2014Background
- IBM sought to compute 2008 Michigan taxes using the Multistate Tax Compact three-factor apportionment formula; the Department rejected the election and required the Michigan BTA formula (sales-factor) for both business and MGRT bases.
- IBM filed suit challenging the Department’s rejection and seeking summary disposition in its favor; the Court of Claims denied IBM and the Court of Appeals affirmed.
- The lead opinion held that IBM could elect the Compact three-factor method for the 2008 tax year and could apply it to the MGRT base as well.
- A dissent argued that the BTA’s mandatory sales-factor apportionment barred the Compact election for 2008–2010 and that the Legislature could not unilaterally amend the Compact without consent.
- The majority rejected implied repeal of the Compact by the BTA and noted later 2011 amendments expressly repealing the Compact’s election provision for some taxpayers.
- The concurrence treated retroactive reenactment in 2011 as allowing a window for the Compact election for 2008–2010, while the dissent maintained that the later statute controls.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether IBM could elect the Compact three-factor formula for 2008. | IBM; IBM. | Department; Department. | IBM could elect the Compact for 2008. |
| Whether MGRT is an income tax under the Compact. | MGRT qualifies as income tax under the Compact. | MGRT is not an income tax. | MGRT fits the Compact's broad definition of income tax; apportionable under Compact. |
| Whether the BTA impliedly repealed the Compact election provision. | Legislature intended to keep both in effect; no implied repeal. | BTA repealed the Compact election by implication. | No implied repeal; statutes harmonized; Compact election available for 2008. |
| Whether 2011 amendments retroactively confirm the Compact election for 2008–2010. | Amendments show legislative intent to preserve election for 2008–2010. | Amendments do not restore for pre-2011 years. | 2011 amendments create a window for 2008–2010 election rights. |
Key Cases Cited
- US Steel Corp. v. Multistate Tax Comm., 434 U.S. 452 (U.S. 1978) (Compact governs apportionment; implied repeal questions arise.)
- Jackson v. Michigan Corrections Comm., 313 N.W.2d 159 (Mich. 1946) (last-expression rule; later enacted statute controls in irreconcilable conflicts.)
- Rathbun v. Michigan, 284 Mich. 521 (Mich. 1938) (statutes in pari materia read harmoniously where possible.)
- Washtenaw Co. Rd. Comm’rs v. Pub. Serv. Comm., 349 Mich. 663 (Mich. 1957) (implied repeal considerations in statutory interpretation.)
- Malpass v. Dept. of Treasury, 494 Mich. 237 (Mich. 2013) (taxation statutes and interpretation post-IRS-like definitions.)
- Studier v. Mich. Pub. Sch. Emps’ Retirement Bd., 472 Mich. 642 (Mich. 2005) (presumption against impairing sovereign powers; legislative power to amend)