Midamerican Energy Company v. Department of Treasury
308 Mich. App. 362
| Mich. Ct. App. | 2014Background
- This is an appeal about the industrial processing exemption under the Michigan Sales Tax Act (MCL 205.54t).
- Plaintiffs are electricity providers and telecommunications companies that purchase electricity from providers.
- Plaintiffs contend their electricity purchases qualify for the exemption because they modify electricity into telecommunications signals or use electricity to produce signals for sale to consumers.
- The core issue is whether telecommunications signals are tangible personal property under MCL 205.51a(q).
- The Court of Claims held telecommunications signals are not tangible personal property or electricity, so the exemption does not apply and granted summary disposition for the Department.
- The Court of Appeals affirmed the trial court’s decision.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether telecommunications signals are tangible personal property under MCL 205.51a(q). | Detroit Edison et al. claim signals are tangible personal property (as electricity or perceptible goods). | Department argues signals are not tangible personal property or electricity at all stages. | Signals are not tangible personal property. |
| Whether electricity used to produce signals constitutes industrial processing under MCL 205.54t. | Electricity is transformed into a modified or new form of tangible personal property (signals) for sale. | Signals are not tangible personal property; not eligible for exemption. | Plaintiffs are not engaged in industrial processing. |
| Whether sale of modified or produced signals to consumers falls within 'sale at retail' for purposes of the exemption. | The end product (signals) is tangible personal property sold at retail. | There is no tangible personal property being sold; exemptions do not apply. | Not eligible due to lack of tangible personal property. |
Key Cases Cited
- Elias Bros Restaurants v Dep’t of Treasury, 452 Mich 144 (1996) (exemption construction and burden of proof in tax exemptions)
- Guardian Indus Corp v Dep’t of Treasury, 243 Mich App 244 (2000) (strict construction of exemptions against taxpayer)
- Ford Motor Co v Dep’t of Treasury, 496 Mich 382 (2014) (statutory interpretation—text in context and plain meaning)
- Manuel v Gill, 481 Mich 637 (2008) (interpretation of statutory language in context)
- Wayne Co v Wayne Co Retirement Comm, 267 Mich App 230 (2005) (expressio unius principle in statutory interpretation)
- Redden, 290 Mich App 65 (2010) (interpretation and context of statutory terms)