Sietsema Farms Feeds, LLC v. Department of Treasury
296 Mich. App. 232
| Mich. Ct. App. | 2012Background
- Sietsema Farms Feeds, L.L.C. appeals a Tax Tribunal order granting summary disposition to the Michigan Department of Treasury and upholding the use tax assessment.
- The petitioner operates a feed mill producing feed from corn and grains, which is sold to hog and turkey farms linked to the Sietsema entities.
- A use tax audit determined that equipment purchased for use at the mill was not exempt under the agricultural-production exemption, including scales, storage tanks, monitoring equipment, a liquid storage tank, and a personnel elevator.
- The Tax Tribunal held the petitioner did not use the equipment in an agricultural-production activity and also denied the industrial-processing exemption after reviewing additional information.
- The tribunal’s decision was affirmed on appeal, with the court applying de novo review and interpreting the exemptions narrowly in favor of the taxing authority.
- Petitioner argued exemptions under both agricultural-production and industrial-processing provisions; the court analyzed legislative intent and relevant case law.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the agricultural-production exemption applies when equipment is used at a feed mill to produce feed for others’ livestock | Sietsema contends criteria met: business enterprise and use in feeding livestock | Treasury argues equipment not used to feed livestock or care for livestock | No; exemption denied for lack of use in feeding livestock; not entitled to agricultural-production exemption. |
| Whether the industrial-processing exemption applies to the disputed equipment | Petitioner asserts potential entitlement | Tribunal properly denied the industrial-processing exemption after review | Affirmed denial of industrial-processing exemption. |
Key Cases Cited
- William Mueller & Sons, Inc v Dep’t of Treasury, 189 Mich App 570 (1991) (exemption when equipment used to provide agricultural services to others; not required to be actual producer)
- Mich Milk Producers Ass’n v Dep’t of Treasury, 242 Mich App 486 (2000) (equipment used in processing/production process can be exempt if part of producing milk; focus on use in production, even if not the producer)
- Canterbury Health Care, Inc v Dep’t of Treasury, 220 Mich App 23 (1996) (strict construction of exemptions, ambiguities resolved in taxpayer’s favor)
- Paris Meadows, LLC v City of Kentwood, 287 Mich App 136 (2010) (de novo review standard for Tax Tribunal decisions; statutory interpretation guidance)
- Klooster v City of Charlevoix, 488 Mich 289 (2011) (material evidence standard; limits on review of factual findings)