Kerry C Nagle v. Department of Treasury
333850
Mich. Ct. App.Aug 8, 2017Background
- Nagle filed Michigan income tax returns for 2004, 2006, 2007, and 2009; the Department of Treasury (Treasury) later assessed large tax liabilities for those years, which Nagle did not pay or challenge administratively.
- Treasury assessed the 2004 tax in 2007 (very large amount) and other years in 2008, 2009, and 2015; Nagle made no voluntary payments.
- Treasury used administrative collection tools—intercepting funds (including via unclaimed property) and recording tax liens—to reduce Nagle’s outstanding balance.
- Nagle sued in the Court of Claims seeking return of seized funds and removal of liens, arguing the six-year statute of limitations in MCL 600.5813 barred collection for 2004, 2006, and 2007, and that the 2009 assessment violated a separate four-year statute.
- The Court of Claims granted summary disposition to Treasury on Counts I–III (statute of limitations defense) and granted Nagle relief on Count IV (Treasury conceded the 2009 assessment was improper), but denied a refund because of Nagle’s larger outstanding debt.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether MCL 600.5813’s six‑year limit bars Treasury from using administrative collection (setoff, liens, interceptions) after six years from assessment | Nagle: expiration of six‑year statute extinguishes tax debt and bars any collection, including administrative enforcement | Treasury: MCL 600.5813 governs commencement of judicial actions only; administrative collection rights remain and debt is not extinguished by that statute | Court: statute applies to judicial "personal actions" only; administrative collection may continue despite six‑year passage |
| Whether Treasury’s interception/setoff of funds payable to Nagle was improper after the limitations period | Nagle: setoff was barred because debt was time‑barred | Treasury: setoff valid because underlying assessments were final and debt remained collectible administratively | Court: setoff and liens were proper to satisfy outstanding tax liability |
| Whether a taxpayer’s failure to sue or challenge an assessment converts noncollection into forfeiture of the State’s collection rights | Nagle: inaction by Treasury for six years should forfeit collection rights | Treasury: failure to sue does not forfeit administrative remedies; assessments that are final remain collectible | Court: no forfeiture; statutes and case law support continued collection tools absent statutory extinguishment |
| Whether the 2009 assessment complied with the applicable statute (MCL 205.27(a)) | Nagle: 2009 assessment was issued more than four years after filing and violated statute | Treasury: conceded the 2009 assessment was improper and agreed to cancel it | Court: Count IV granted for Nagle; but no refund because larger unpaid liability offset any cancelled assessment |
Key Cases Cited
- Gillie v. Genesee County Treasurer, 277 Mich. App. 333 (procedural review standard for C. of App. on summary disposition)
- Elba Township v. Gratiot County Drain Commissioner, 493 Mich. 265 (statutory interpretation reviewed de novo)
- Stephens v. Dixon, 449 Mich. 531 (statements on purpose of statutes of limitation as procedural devices)
- Massey v. Mandell, 462 Mich. 375 ("cause of action" is a legal term of art)
- Whispering Pines AFC Home, Inc. v. Dep’t of Treasury, 212 Mich. App. 545 (Treasury’s administrative setoff and lien authority upheld)