Liem Ngo v. Department of Treasury
498 Mich. 1
| Mich. | 2015Background
- Three homeowners (Gardner, Ngo, Maselli) sold their principal residences after SEVs declined from the purchase date and paid Michigan real estate transfer tax.
- Each requested refunds under MCL 207.526(u), which exempts transfers of principal residences when the SEV at conveyance is equal to or less than the SEV at acquisition, but includes a penalty if the treasurer finds the sale was for a value “other than the true cash value.”
- The Department of Treasury denied refunds, interpreting “true cash value” to mean twice the SEV (because SEV = 50% of true cash value) and asserting refunds were improper when sale prices differed from that figure.
- The Michigan Tax Tribunal granted refunds after finding arm’s-length sales and declining SEVs; the Court of Appeals reversed, adopting the Treasury’s interpretation (majority), with a dissent rejecting that reading.
- The Michigan Supreme Court granted relief in lieu of leave, holding that “true cash value” means fair market value (price from an arm’s-length transaction) and reversing the Court of Appeals; remanded to Tax Tribunal to reinstate refunds and correct any calculation errors.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Meaning of “true cash value” in MCL 207.526(u) | It means fair market value — price from an arm’s-length sale; exemption applies if SEV at sale ≤ SEV at acquisition and sale was at fair market value. | It is a term of art equating to the assessor value (i.e., twice the SEV), so exemption fails unless sale equals that numeric value. | True cash value = fair market value (arm’s-length price); penalty applies only when sale is for other-than fair market value. |
| Applicability of the 20% penalty clause | Penalty applies only if Treasurer finds sale was not at fair market value (sham or non-arm’s-length). | Treasury had interpreted “other than” to catch sales not equal to twice SEV (or greater than twice SEV). | Penalty is a deterrent to under-the-table transfers; cannot be read to require exact numeric equality to twice SEV. |
Key Cases Cited
- CAF Investment Co v State Tax Comm, 392 Mich 442 (1974) (true cash value equated with fair market value)
- Whitman v City of Burton, 493 Mich 303 (2013) (statutory interpretation reviewed de novo; legislative intent controls)
- Sun Valley Foods Co v Ward, 460 Mich 230 (1999) (statutory construction rules; give effect to every word)
- Detroit Lions, Inc v Dearborn, 302 Mich App 676 (2013) (describes true cash value as price from arm’s-length negotiation)