Andrie Inc v. Department of Treasury

Trеasury Inc Andrie OF v DEPARTMENT TREASURY ANDRIE INC 1). (Calendar 6, Argued No. Decided Docket No. 145557. November June 2014. Claims, seeking a brought in the an action Court of Andrie Inc. years protest for the it under refund of use taxes had by through Department of the 2006 after audit it taxes owed for Andrie had understated the determined that by (UTA), seq., period 205.91 et Tax Act that under Use amount, $398,755. department’s at auditor To arrive tangible purchases of and other had Andrie’s fuel reviewed items, purchased in from Andrie had some of which asphalt Michigan sellers, shipping and for use in its business of products requested Lakes. The auditor across the Great other proof provide that sales tax due under General that Andrie (GTSA), paid, seq., et either Act MCL 205.51 was Sales Tax seller, items determined to be Andrie the retail on that were 205.94(l)(a) subject tax, applying the in MCL to use assessing those items if Andrie use tax for if Andrie did so ultimately imposed department tax on fuel and use not. The Michigan- supply Michigan, purchases made in Andrie sellers, did sales tax as a if the invoice not list based retail paid. separate had that sales tax been line item establish Claims, arguing of that it was Andrie filed suit the Court rely requirement alleged the GSTA that the on an of entitled to goods purchased price in the of the sales tax be included separately regardless stated. The whether the sales was Claims, Manderfield, J., that M. held Court Paula J. purchases partial those of use tax for was еntitled to a refund tax, subject reasoning because Andrie to sales that were presumption that was included in the was to a entitled purchased, required provide goods Andrie was to proof retail had remitted sales sellers department appealed. Appeals, department. The Court of The JJ., P.J., affirmed on this and Wilder and Murray, Fitzgerald, issue, responsible holding that because retailer was duty paying place a erroneous paid. purchaser the sales had been show (2012). department’s granted App Supreme Court 496 Mich 161 stay precedential Appeals motion to effect the Court opinion granted department’s application and also for leave appeal. 493 Mich 900 opinion joined by In an Chief Justice Justices Young, Supreme and the Court Markman, Kelly, McCormack, Viviano, held'. exemption In order to be entitled to the from the use tax found 205.94(l)(a), in MCL one must that the show sales tax was both paid tangible personal due and property. on the sale of that The demonstrating exemption burden of entitlement to the use tax seeking taxpayer rested on the it. Because Andrie not did submit paid, evidence that sales tax had been not entitled was exemption. Appeals judgment to the use tax The Court was reversed to it the extent held that the use tax he could never levied property purchase property subject on if the of that was to sales tax. complementаry 1. The supple- use and sales taxes are and mentary, potential applications mutually and their are not imposes use, storage, exclusive. The UTA a tax on 6% the and consumption tangible personal property Michigan, all in imposes tangible while the GSTA a tax on the 6% sale of all personal property Michigan. exception, tangible in an Absent personal property subject sold and in used is to both taxing use and sales The text tax. of each statute indicates that they may property, long be on levied the same as as the respective predicate place. legal taxable have taken events The responsibility solely consumer, the for use tax on falls the while legal responsibility the for tax the sales falls on the retail seller. pass retail seller is authorized to the economic burden of by collecting point the sales tax the at the tax of sale from the consumer, hut the whether consumer tax remits sales to the pays retail source, seller seller or the the tax sales from another responsible remitting the seller is the tax to sales department. 205.94(l)(a), property MCL Under sold Michi- gan paid on which exempt tax was GSTA under the is from use paid tax if the tax due and was on the retail sale to a consumer. provision unambiguously payment This requires of the sales tax exemption applies. Therefore, department before the prop- erly purchases assessed tax on use those in-state for which actually paid Andrie failed to submit evidence that sales tax was at the time of sale. Taxpayers 2. presumption not a are entitled to that sales tax prices paid receipts was included in the to retailers when their to separate do not list a taxpayer sales tax as A line item. is entitled Andrie Inc 205.94(l)(a) proves when it exemption in MCL to tax the use seller, seller, who if the retail paid tax the retail even it sales to tax, payment did not legal responsibility for hears the However, purchaser department. a was not the tax to the remit point presumption that it the sales tax at entitled to a exemption rests on proving to an entitlement sale. The burden of exemption, presumption right asserting and party department. payment to the shift this burden tax would always Furthermore, tax is included an that sales effectively purchaser to the purchase entitle a would item’s having merely due without whenever sales paid, render satisfy the tax which would its burden to show was 205.94(l)(a) requirement in that sales he superfluous the paid. that it no evidence Because Andrie submitted both due seller, remitted sales retail or that seller burden, sale, department it did not meet its tax to exemption. not entitled to the was 205.73(1), which states that retail seller 3. MCL purchase pricе imply include sales item’s does not state or that an duty prove of its that sales was did not relieve Andrie statute, 205.73(1), only paid. advertising a restric- representations public; it did not tion on retail sellers’ purchase components of item’s purport actual an to define the price. part. Appeals’judgment reversed Court only. Cavanagh result concurred in the Justice 205.52(1) dissenting, that Justice stated because Zahra, only places paying on retailers and not the burden of sales tax consumers, should have afforded consumers a the Court actually paid if it presumption had was that retailers He would that was due under the statute. have evident presumption producing permitted rebut the state to paid or the consumer the tax was not evidence that, true, would have with an erroneous belief transacted exempted Once to be from sales tax. entitled transaction rebutted, return to the the burden would was actually present evidence that the sales tax was consumer to properly paid entitled to or to consumer was establish exemption. other some — — Use Taxes. 1. Taxation Sales Taxes exception, tangible personal property used in sold and Absent subject Michigan Sales Tax taxation under both General Opinion of the Court seq., Act, Act, seq., et MCL 205.91 et MCL 205.51 and Use Tax long respective predicate place. as thе taxable events have taken — — — — Exemptions 2. Taxation Sales Taxes Use Taxes Use Tax Burden of Proof. purchaser tangible personal property A user and who seeks to pursuant claim an from taxation under the Use Tax Act 295.94(l)(a) showing to MCL the burden has that sales tax was property. both due and on the of the sale Honigman Miller Schwartz and (by Cohn LLP June Haas, Pirich, Summers John D. Quinn) and Brian T. plaintiff. Schuette,

Bill Attorney General, Lindstrom, Aaron D. General, Bandstra, Solicitor Richard A. Legal Chief Counsel, McGivney, and Jessica A. Attorney Assistant General, for defendant.

Amicus Curiae:

James R. Holcomb for the Chamber of Commerce. (UTA)1

YOUNG, C.J. Use Michigan’s Tax Act imposes a use, 6% on a consumer’s storage, consumption tangible of all personal property Michigan.2 The UTA exempts the use property of the use imposition tax when [sales] “the due on the retail sale to a consumer.”3 Concurrently, Michigan’s General (GSTA) Tax Sales Act4 imposes a tax on a 6% retailer’s gross proceeds, to be remitted the retailer seq. MCL 205.91 et 205.93(1). purposes opinion, use, storage, For of this consumption tangible personal property collectively are referred to as property of the “use” 3 205.94(l)(a). seq. MCL 205.51 et Treasury Dep’t v Andrie Inc Opinion of the Court ***5 (the At issue department).* of Department of whether a and user purchaser Court is before this avail itself of the use property may tangible personal of it is prove payment when unable to exemption of to the retail seller at the sale by point either itself by department. or the retail seller to to the The burden of entitlement proving right exemption.6 party asserting on the rests of the use tax language exemption, Under the plain seller 205.94(l)(a), hold that when the retail does we on a particular tax was collected admit that sales of that prop- the user tangible personal property, sale of of purchase must show erty an exemption before the user can claim that property Accordingly, portion tax. we reverse from the use that the use tax decision that held Appeals’ the Court if the property purchase be levied on can never tax. merely subject to sales property AND PROCEDURAL HISTORY FACTS en- Michigan corporation is a Plaintiff Andrie Inc. And- transportation. construction and gaged in marine transports asphalt transportation rie’s marine division throughout the Great Lakes products and other tugboats using in the and Canada customers Midwest other purchases supplies fuel and barges. purchased in Michi- business, its some of which are for sellers. gan persons upon all there he collected from “[T]here is levied shall retail, making ownership engaged which in the business of sales at consideration,

tangible personal property an annual tax transferred for gross engaging equal privilege to 6% of business business, plus pеnalty applicable proceeds and interest of the 205.52(1). law, provided by deductions allowed this act.” MCL less 144, 150; Treasury Dep’t, Elias Bros Restaurant NW2d Opinion of the Court

The use department conducted a tax audit Andrie covering 1,1999, through July 31, November 2006. The department’s auditor purchases reviewed Andrie’s items, tangible the in-state fuel and including supply purchases. Where the auditor determined an item was tax, subject to use the auditor requested that Andrie provide tax proof paid. that sales If pro- Andrie duced a receipt showing that it had paid sales tax to the seller, department retail in applied 205.94(l)(a) and did not assess use tax. But Andrie could not prove that sales tax had paid, been either seller, itself or the retail the department assessed Andrie the use tax that property. department

The ultimately imposed use on tax fuel and supply Andrie made in purchases Michigan, from Michigan-based sellers, retail where the did not invoice list i.e., sales tax as a separate item, line where Andrie prove was unable to that sales tax had been on 205.94(l)(a). those transactions as required Notably, department concedes that it is unaware whether had, these retail fact, sellers in remitted sales tax to the department.

As a result of audit, the department determined that Andrie understated its use tax in the amount $398,755.00. Andrie the assessments protest under and filed in suit the Court of Claims. In its comрlaint, Andrie alleges that it rely was entitled to on an alleged requirement of the GSTA that the be included price of the goods purchased regardless of whether the sales tax was separately stated.

The Court of Claims held that Andrie was entitled to a partial refund of use tax for purchases those that were subject to sales tax. That court reasoned that Andrie was entitled to a presumption that sales is included goods purchased, and therefore Andrie Treasury Dep’t Opinion Court of the provide proof obligation not have did department. tax to the remitted sales sellers retail affirmed on The Court of Appeals appealed. department that a transac- “the mere fact issue, holding that that the means necessarily subject is to sales tion stated tax.”7 It further use subject transaction “[bjecause responsi- has the ultimate that, the retailer a duty place it is erroneous bility pay any the sales tax was indeed to show that the purchaser are subject not Thus, the transactions to the state. in of held favor properly and the trial court use issue.”8 on this plaintiff op review

STANDARD is of law that we question a Statutory interpretation statute, a courts When interpreting review de novo.9 reason intent legislative must “ascertain in expressed inferred from the words ably be “the mean plain us to consider requires This statute.”10 'its phrase place word or as well as ing of the critical ”11 statutory in scheme.’ ment and purpose

DISCUSSION matter, use a note that and As we preliminary complementary supplementary.12 sales taxes are 7 Andrie, Treasury, 355, 372; App Mich 819 296 NW2d of (2012). 920 8 (Citation omitted.) Id. 9 Lansing, Investigation in re 1999 Riots East 463 Mich In March of (2000). 383; 617 NW2d 310 10 (2002). Servs, Inc, 304, 312; 34 Koontz vAmeritech 645 NW2d 11 Ward, 230, 237; Valley Co v Mich 596 NW2d 119 Sun Foods 460 501; States, 137, 145; quoting Bailey (1996), v United 516 US S Ct L Ed 2d Bros, See Elias Mich at 153. 496 Mich 161 Opinion of the Court conclusion,

Contrary to the Court of their Appeals’ poten- tial are applications mutually exclusive.13The two taxing entirely statutes relate separate taxable events: the use and sale tangible personal of property. The use, UTA imposes storage, 6% tax on the and consump- tion of all tangible personal property Michigan: in upon

There is levied and there shall be collected from every person specific in this privilege state tax for the of using, storing, consuming tangible personal property in equal this state at a rate of property 6% the of the 3b.[14] specified or services in section 3a or Meanwhile, the GSTA imposes 6% tax on the sale of all tangible personal property Michigan: upon

[T]here is levied and there shall be collected from all persons engaged retail, making by business at ownership tangible personal property which is transferred consideration, privilege annual tax for engaging equal in that gross proceeds business to 6% the business, plus penally applicable and interest pro law, act.[15] vided less deductions allowed Absent an tangible exception, personal property sold and used in is subject to both use tax. It plain to see from the text of each taxing statute they are capable being of levied upon the same as property, long as the respective predicate taxable sale) (i.e., events use and place. take 13 reaching conclusion, In Appeals upon its the of Court relied Elias (“The Bros, 452 Mich at n 1 subject [UTA] 146 ... covers transactions not tax.”) added). general (emphasis explained sales below, For reasons plain language this was an inaccurate restatement of the of the UTA and GSTA, 205.94(l)(a). including Indeed, the MCL Elias Bros later acknowl edges provisions except property that “the use acquired tax in a trans action this state on which a sales tax has been at ....” Id. 153 added). (emphasis n 19 14 205.93(1). MCL 15 205.52(1). MCL Dep’t 169 Andrie Inc v Opinion of the Court event, taxable by separate a triggered tax is Just each upon separate each falls a for tax legal responsibility the solely the use tax falls for entity. legal responsibility The for contrast, legal responsibility By on the consumer.16 seller, being retail tax on the with the sales tax falls The at retail.17 making for the of privilege levied pass obligated is authorized —but not retail seller —to collecting tax at burden of economic But whether the sale from the consumer.18 point seller tax to the retail seller remits sales consumer source, seller is from another the sales tax pays the department, the sales remitting responsible gross of the seller’s percentage tax is calculated as a which period.19 in a taxable proceeds potentially apply the use and sales taxes Although taxpayer a other- tangible personal property, the same if it entitled to an subject to use is wise the conditions delineated MCL with complies payment involves exemptions One of these 205.94. tax: the sales

(1) exempt under following are from the tax levied act...: this (a) Property transaction a tax in this state ‍‌‌‌​‌‌​‌‌​​​‌‌​​​‌​‌​‌‌‌‌‌​​​​​‌​‌‌​‌‌​​​‌​‌‌​​‌‍on which sold act, 167, general PA paid under the 1933 205.78, paid on retail if the tax was due and

205.51 to consumer.[20] sale a 16 220, 226, Terco, App Dep’t Treasury, NW2d 17 339 Inc v

(1983). Ammex, Treasury, App 205.52(1); Mich See MCL 460; 603 NW2d 308 205.73(1). Ammex, Inc, App at 460. also MCL Mich See 205.52(1). opinion, explained For reasons later See MCL legal obligation to tax to the has a remit sales retail seller fact necessarily department the sales tax does mean 205.94(l)(a). purchaser under MCL retail sale to added). 205.94(l)(a) (emphasis 496 Mich 161 Opinion op the Court

The exemption requires pay- statute unambiguously ment tax exempts of sales before it the taxpayer from the use tax. It is not enough the sales tax was rather, due on the rеtail sale of the property; must both “due paid” be before the Thus, applies. department properly assessed use purchases in-state where Andrie failed to submit actually evidence that sales tax at the time of sale.

Our of conclusion that the terms the use and sales taxes render them capable being applied to the same property does no violence to “targeted legislative effort to avoid double taxation.”21 Pursuant 205.94(l)(a), payment of is mutually exclu- payment sive with tax, the use but the same cannot be said of the potential applicability of the respective given taxes to a article of tangible personal In property. case discussing law double taxation, the threat of double taxation consequence was a real depart- of the position;22 here, ment’s double taxation is at a best hypothetical reality, and at worst straw man. The taxpayer, beneficiary as the of the exemption, has the tools to ensure that it may, double-taxed. It part of its freedom to sellers, contract with retail proof demand at the point sale that the sales tax was Bros, See Elias 452 Mich at 152. example, Bros, given taxpayer For in Elias if the was not the benefit processing exemption 205.94(g), of the industrial to the use it certainty taxpayer components was a that the would tax on the used product’s рroduct sold, consumed manufacture and on the end contradicting Legislature’s purpose enacting pro the industrial exemption. Book, cessing Dep’t Treasury, In Id. World this Court very subjecting taxpayer multiple addressed the real risk of states’ by acknowledging sales taxes retail sale can be consummated in only 403, 411; (1999), one Mich citing state. 459 NW2d Lines, Inc, 175, 186-87; Tax v Oklahoma Comm 514 US 115 S Jefferson 1331; Ct L131 Ed 2d 261 Andrie Inc Opinion Court (which be would opportunity if it that misses paid. Even can fact, the alone), taxpayer after the responsibility its that the averring from the retailer an affidavit request the of sale or remitted at point either collected tax was short, double that In taxation the department.23 to taxpay- the in this is traceable to situation could occur cases, not, in the as seen other recordkeeping and er’s scheme. statutory can that the use tax argument its

As an alternative to sales tax should be to on which property never apply to a presumption it is entitled Andrie asserts that paid, to retailers paid is in the prices tax included that sales tax a separate not list sales receipts to do when its the tax exemp- A is entitled to use taxpayer line item. 205.94(1)(a) that it proves when it tion in MCL true the This is even when tax to the retail seller.24 sales technically legal responsi- the retail bears seller —who not remit the the sales tax —does bility payment However, we hold that a to department.25 tax the it paid to a that presumption is not entitled purchaser proving at of sale. The burden of point the tax the the assert- party to an rests on exemption entitlement A of sales exemption.26 presumption the to the ing right this burden to the department, tax would shift payment 23 205.94(l)(a) exemption in conceded This avenue argument, department and it is with the text of UTA at oral consistent grace Admittedly, would come at of the retailer. such affidavit GSTA. 24 Treasury, 465; Engineering Dep’t App Combustion Mich (1996). NW2d 364 25 Id. Bros, “Exemption from taxation effects the Elias 452 Mich at 150. [taxpayers] generally placed unequal on all to of the burden removal Michigan Baptist & Homes Dev support government.” share of.. . Arbor, City 660, 669-70; Co v Ann Mich 242 NW2d 749 For id,., equality,” reason, “exemption of tax which is antithesis showing justifies placing entitlement the burden of taxpayer. Mich 161

Opinion of the Court contrary regarding exemptions. established law least, At very must show purchaser-taxpayer seller, retail or that the seller remitted department. the sales tax no submitted it paid seller, evidence that sales tax to the retail or that department seller remitted sales tax to the on that result, As a burden, sale. it did not meet its and it is not entitled to the exemption.

Furthermore, conjunction with the fact that Andrie the burden bears to demonstrate its entitlement to a tax exemption, always in- cluded in an item’s purchase would violate estab- lished of statutory canons A interpretation. statute’s words should not ignored, be treated as surplusage, or 205.94(l)(a) rendered nugatoiy.27MCL requires that sales tax be both “due paid” property before is exempted the from use tax. A presumption that a purchaser paid the would, tax effect,

sales in entitle purchaser a to the merely whenever sales tax is due without having satisfy to its burden tax paid. to show the This superfluous would render plain language the re- (a) 205.94(1) quirement in MCL that sales tax be both “due and paid.” plain language of the use tax a exemption precludes that sales tax is always paid. grounds

Andrie statutory its argument for a pre- sumption of sales payment tax in MCL 205.73(1),28 DaimlerChrysler 748; Corp, 732, Robertson v 465 Mich 641 NW2d argues department’s Andrie also that the assessments of use tax were unconstitutional, citing Nims, 517; Lockwood v 98 NW2d 753 (1959), rightly which held that a former version of the UTA a ran afoul of ceiling Court, constitutional tax. sales When Lockwood was before this legislature Constitution then stated “at no time shall the levy 1908, 10, Meanwhile, § a sales tax of more than 3%.” Const art 23. Legislature user; purported a use upon enacted tax to be levied however, complicated statutory scheme, necessarily via a the use tax was Opinion the Court states: which selling tangible in engaged the business person

A hold out to not advertise or personal property at retail shall indirectly, manner, directly that the tax or public any an element imposed act is considered as under this not any prohibit act This does price consumer. adding reimbursing by or herself taxpayer from himself by any this act. price tax levied sale 205.73(1) a retail words, states that In other purchase that an item’s may imply not state seller line separate a either as does not include sales on retail Although restriction item or otherwise. An- certainly is with consistent representations sellers’ always tax that sales is proposed presumption drie’s compel it does not purchase price, in an included item’s recognize presumption. such this Court 205.73(1) statute; do not advertising an its terms is represen- on retail sellers’ beyond extend a restriction does not public.29 purport The statute tations 94, point PA as amended collected the retail seller at of sale. See 1937 Effectively, paying § 5. were 1% more than the 1959 PA consumers impermis- ceiling. to be held that use tax structure sales This Court ceiling, and it invalidated sible end run around the constitutional necessarily hold use tax that use tax statute. Lockwood does not Rather, ceiling that what with a constitutional on sales tax. holds conflicts purposes for not circumvent all intents nametag. ceiling by wearing simply a “use tax” separated, Today, responsibility payment of sales and use taxes is Further, falling user, respectivеly. upon seller and the retail 205.94(l)(a) prevents payment proved, taxation under of sales tax is required tax, in the statute overturned Lockwood the use whereas exception. Finally, today’s payment tax while Constitution of use without very ceiling percentages, the same section still a on sales tax establishes any foreclosing claim that use and on the use discusses limitations 9, § 8. cannot See Const art sales taxes coexist. 205.73(1) instance, department in a 1970 enforced MCL For publishing coupon stating admonishing a Ruling, a seller for Letter retail 496 Mich 161 Opinion of the Court define the actual of components purchase an item’s 205.73(1) price. Thus, MCL does not relieve Andrie of duty prove its that sales tax was paid. reading

In addition to its overbroad of statutory 205.73(1) text, argument Andrie’s a creates —that presumption that sales tax is included in an always purchase price item’s on the as- premised faulty —is a sumption that retail seller must use exclusively sales case, revenue to its sales tax liability. Were that the might have a a point purchaser necessarily pays sale; tax the point otherwise, sales at retailer would be unable to remit sales However, in department. nothing the GSTA prevents retail seller from paying its sales tax liability other 205.73(1), sources. Under MCL a retail seller is “not prohibited” from including sales tax in an price, item’s but this option leaves the retail seller the to shoulder event, sales tax burden itself. In that the retail seller may remit gross proceeds the tax from its or from entirely.30 another source statutory Because there is no 205.73(1) in MCL directive a retail seller to directing include sales tax in the charges purchasers, statute fails to establish a presumption that sales tax is always included in an purchase item’s price.

This applied nearly Court identically worded pre- 205.73(1) decessor MCL in Swain Lumber vCo cigarettes. Therein, that “no sales tax” would he levied on the sale of stated, department you quite may charge “It is true that however, cigarettes, cigarettes your sale must be included 1970) gross proceeds.” Ruling (May 22, [taxable] (emphasis Letter 70-2 added), time, withdrawn Revenue Admin ‍‌‌‌​‌‌​‌‌​​​‌‌​​​‌​‌​‌‌‌‌‌​​​​​‌​‌‌​‌‌​​​‌​‌‌​​‌‍Bull 2000-6. At that applied cigarettes. GSTA to the retail sale from, e.g., past years’ Retail could sellers remit their sales taxes reserves, liquidated assets, legally parent assets transferred from subsidiary loans, corporations, Further, happens, etc. as sometimes liability retailer understate its sales tax or fail to remit all, legal obligations at violation its under the GSTA. Dep’t 175 v Inc Opinion the Court believed it case, the plaintiff Dev In that Co.31 Newman (to which no at wholesale selling to a purchaser in nature of the fact the applied), tax when sales retail meant the sale was at business purchaser’s (to the transaction was After appliеd). which sales the business was purchaser’s nature complete, discovered, plaintiff assessed department Plaintiff unsuc- sale was at retail. tax because the sales the purchaser. sales tax from cessfully sued to recover This Court stated: purchaser] against [a arises from the

No in purchaser] [aof as to non-inclusion of silence purchaser]’s paying time price [the before or at the price demanded. 205.73(1)] liability part no on the of the [MCL creates incorporated in or purchaser tax unless the tax is tangible purchaser accepts the price to the and the added understanding.[32] property personal with such that, Andrie, Swain Lumber holds According to invoice, the not listed on an whenever sales tax is goods into the retail of the price tax was incorporated This is not accurate.33 purchaser. and thus by 441; Co, Dev Mich 22 NW2d Lumber Co v Newman Swain 167, 23, statute, § That as set forth in 1933 PA stated: tangible personal prop- person engaged No in the business of public any erty or at retail shall advertise hold out manner, indirectly, imposed directly that the tax herein is not price Nothing element in the to the consumer. considered any taxpayer prohibit deemed contained this act shall be adding reimbursing to his sale tax levied himself hereunder. added). Lumber, (emphasis at 441 Swain fact, rejected interpretation Tribunal has In Tax Treasury, 4 MTT Andrie. In Lumber offered Kruszka Swain 496 MICH 161 Opinion Court of the merely Lumber respon- Swain reiterates the legal sibility for the sales falls on the retail seller: if a purchaser agree does not tax and knowingly pay the seller fails to include the tax in the sale price, seller not claw back a separate sales tax reimburse- ment at a date. later This conclusion for the allows possibility that sales tax is incorporated into an item’s sale price. Although a retail seller has a legal to remit sales obligation tax even not affirma- does tively shift the burden purchaser, tax to the this does not mean tax necessarily that the the paid by seller 205.94(l)(a) such that the in exemption use applies.

RESPONSE TO THE DISSENT The dissent to fails defer to the rule statutory precluding construction in surplusage interpreting the “due phrase paid,” apply instead asks us to the tax exemption use whenever tax merely is due. To end, the would dissent reverse the rule that we unambiguously established in Elias that the Brothers: burden to prove entitlement a tax to exemption rests upon the person claiming the But exemption. despite contention, the dissent’s the consumer is not need of a presumption that the sales was paid, because the consumer is able prove to his entitlement to the exemp- tion every case.

The dissent states that the pays consumer never because the “places duty GSTA no aоn (Docket 88327), 13, 1986, 526-527 No. issued November taxpayer-purchasers obligation claimed that a retail seller’s mere to liability. remit sales tax them of absolved their use tax The tribunal held 205.73(1) that, while purport Swain Lumber and MCL to address a situation, liability given they guidance seller’s sales tax in a do not offer purchasers’ liability. relative to a use tax Inc Opinion the Court But the fact the tax.”34 payment consumer tax does not duty pay has no a consumer ability no to establish consumer has mean that the supported This is exemption. he is entitled 205.73(1) retailer-taxpayer permits statute: to the sale by adding himself or herself “reimburs[e] Note that GSTA].” by [the tax levied charge taxpayer merely permit does not statute distinc- tax —a relevant value of the consumer the 205.73(1) Rather, MCL the dissent. according to tion the sales tax to include retailer-taxpayer permits price.” “tax” “to the sale may add the retailer itself: that a consumer Therefore, disagree respectfully we purposes for use tax the sales tax cannot on the ultimately the retail seller because simply department. the tax to remitting hook for remains that the consumer can see Accordingly, one necessary the documentation to obtain fully equipped bur- knowledge of its With exemption. claim the later can the consumer of sale mind,35 point in at the den the inclusion of sales that shows reсeipt for a bargain Alternatively, request price. purchase tax in the averring that sales the retail seller an affidavit from to the or remitted in the sale was included shows instance, the consumer In either department. that simple. It is paid. that the sales tax was recordkeeping requirements, emphasizes The dissent tax infor- to record their sales i.e., retailers’ mandate (who are not that consumers mation, justification App Dep’t Treasury, Quoting Engineering Combustion that, argument if the 465, 469; of this is The thrust 549 NW2d 364 consumer-taxpayers cannot the tax is correct dissent they the use are entitled to thus be certain themselves and retailer virtually to the consumer. exemption, unavailable 7; 17, 27 Lansing, Advertising Mich n v East Outdoor Adams law.”). (2000) presumed (“People to know the are NW2d 496 Mich 161 Opinion of the Court records)

required to such keep are entitled to a pre- sumption of sales tax payment. Recordkeeping require- ments exist so that the department may confirm the tax liability taxpayer.36 of a They do not exist to facilitate a claim taxpayer’s of an exemption. Further, “exemptions are the antithesis of tax equality.”37 If a mandatory recordkeeping requirement existed in order to facilitate (rather an exemption claim than to taxation), facilitate it would promote and, exemptions turn, tax inequal- ity. But that would run counter to the reasoning under- lying the Elias Brothers rule. Accordingly, recordkeеp- ing requirements are not relevant determining who has the duty to prove entitlement to an exemption. course,

Of Legislature could have made it less burdensome for the consumer to avail itself of the use However, exemption. under Michigan law, a burden exists, and under Elias Brothers that burden is shoul- dered person seeking a tax exemption. Short of ignoring 205.94(l)(a) statutory text of MCL (“. .. and paid”) or reversing Brothers, Elias the depart- ment prevail must in this matter.

CONCLUSION In order to be entitled to the exemption from the use tax found in MCL 205.94(l)(a), one must show that the sales tax was both due and paid on the sale of that tangible personal property. The burden of demonstrating entitlement to this tax exemption rests on the taxpayer seeking the exemption. Accordingly, because Andrie has not submitted any evidence that sales tax was paid, Andrie has not carried its burden and is not entitled to the 205.94(l)(a). exemption delineated in MCL We reverse generally 205.68; See MCL 205.104a. Bros, Elias 452 Mich at 150. Treasury Opinion Dissenting Zahra, J. held which judgment Appeals’ of of the Court that portion if the property levied on never be tax can that the use tax. to sales subject that property purchase JJ., Viviano, con- McCormack, Kelly, Markman, Young, C.J. with curred only. in the result I concur J.

CAVANAGH, is about whether This case (dissenting). J. ZAHRA, consum- must afford Treasury the Department when The is due. that no use tax presumption a rebuttable ers only be afforded need that consumers majority bеlieves can prove consumers those when presumption such a tax to the remitted sales actually retailer that the either the value to the retailer or that the consumer state (an on imposed to the tax equal amount the sales tax 205.52(1)). I disagree. to MCL retailer pursuant 205.52(1) paying the burden only places on a sales tax retailers; impose it does not law, that, a matter of the fact light In consumers. should this Court retailer must only actu- that the retailer a presumption afford consumers tax was due if evident that sales it is ally paid pre- rebut under the statute. evidence, circumstantial by producing some sumption or that otherwise, the tax was not that, an erroneous belief transacted with consumer to be ex- the transaction entitled true, would have is rebut- tax. Once the from sales empted present to the consumer ted, the burden returns or to actually paid the sales tax was evidence that entitled to properly consumer was establish I case, Applied present exemption. other some presump- to a is entitled hold that the consumer would Having considered paid. tax was tion that the sales 180 496 161 Mich Dissenting Opinion Zahra, J. evidence,

record I would further conclude there was sufficient evidence to rebut this I presumption. would remand to the trial court for further proceedings con- sistent with this opinion.

I. LAW This case requires interprеt us to the General Sales Tax (GSTA)1 (UTA).2 Act and the Use Tax Act When interpret- statutes, ing we first turn to the words of the The statutes. overriding goal statutory interpretation is to ascertain give effect to the Legislature’s intent.3 The words of a statute provide the most rehable indicator of the Legisla- ture’s intent and should be interpreted the basis of their ordinary meaning and the overall context in which they are used.4 An undefined statutoiy phrase word or must be plain accorded its and ordinary meaning, unless the defined phrase word or is a “term of art” with a unique legal A meaning.5 court look beyond the words of a statute to ascertain legislative intent where statutory language is ambiguous.6 A statutory provision is ambigu- only ous if it irreconcilably conflicts with another provi- sion equally or is susceptible to two or more meanings.7

The GSTA and the UTA are “complementary supplementary” statutes,8 meaning provisions 1 seq. MCL 205.51 et 2 seq. MCL 205.91 et 3 Flick, (2012). People 10; v 487 Mich 790 NW2d 295

4 Id. at 10-11. 5 People (2007). Thompson, 146, 151-152; 477 Mich 730 NW2d 708 6 Valley Ward, 230, 236; Sun Foods Co v Mich 596 NW2d 119 (1999). Lansing Mayor Comm, 154, 166; See v Pub Serv 470 Mich 680 NW2d (2004). Restaurants, Treasury Dep’t, 144, 153; Elias Bros Inc v NW2d 837 Dissenting Opinion Zahra, J. understanding provisions of one act are relevant up statutes are set so of the other.9 two item, a con- on an then sales tax was imposes for use tax.10 The GSTA sumer is not liable all tangible personal property 6% tax on the sale of Michigan: upon and be collected

[T]here is levied there shall persons engaged making in the at from all business retail, ownership tangible personal property by which consideration, privi tax for the transferred for annual equal gross lege engaging of in that business to 6% of the business, proceeds plus penalty if of the and interest law, applicable provided by by less deductions allowed act.[11] this only

Sales tax is not levied on all sales. It is levied on in by “persons engaged making sales the business of retail,” only upon sales at and then transfer . . . for consid- “ownership tangible personal property Furthermore, eration.” this Court has held that sales only personal property tax is levied on retail sales of in Michigan.12 that are consummated use, UTA tax on the Similarly, imposes 6% all storage, consumption tangible personal prop- and erty Michigan: 9 (“The provisions Id. in the Sales Tax Act are relevant to use tax provisions complemen determinations because the sales and use tax are tary recognition supplementary. Both statutes contain a ... of the other.”) omitted.) (Quotation provisions operation of the marks 205.52(1) (defining See MCL the amount of sales tax and the sales to tax); applies); (listing exempt

which it MCL 205.54a sales from sales MCL 205.93(1) 205.94(l)(a) tax); (defining (exempting the use from use any property ‍‌‌‌​‌‌​‌‌​​​‌‌​​​‌​‌​‌‌‌‌‌​​​​​‌​‌‌​‌‌​​​‌​‌‌​​‌‍paid tax tax is under the sold on which sales GSTA). 205.52(1). Book, 403, 410-411; Treasury Dep’t, Mich See World NW2d 293 496 Mich 161 Zahra, J. Dissenting Opinion upon and there shall be collected from-

There is levied every specific privilege for the person in this state tangible using, storing, consuming personal property in or equal property state at a rate to 6% of the of the ,[13] or services . .. tax unless pay All consumers must therefore use subject exemption. their transaction is to a use tax tax,14 to the exemptions There are a number of use (STE). is the The largest exception which from use tax sold in this exempts “[pjroperty STE state on which transaction tax is under act, 1933 PA MCL 205.51 to general 205.78, if the tax was due and on the retail sale to a consumer.”15 majority interprets being the STE as satisfied paid” by

sales tax was either “due and the consumer to retailer In Treasury. my retailer to the view, improper interpretation this is an of the statute. GSTA, required pay Consumers are not tax under the state, and all taxes that are due are only paid Therefore, say to retailers. it is incorrect that con- sumers sales tax to retailers. common for While consumers to speak colloquially paying about on their are purchases, really only paying consumers the value of the sales tax to the retailer. The direct incidence of sales tax falls on retailers alone.16The 13 205.93(1). MCL 14 ease, example, originally For in claimed this that “fuel, 205.94(l)(j) provisions, in entitled to the MCL supplies, maintenance, repairs for the exclusive use of a vessel of 500 engaged tons or more in interstate commerce.” 15 205.94(l)(a). MCL 205.52(1). Engineering Treasury Dep’t, MCL See also Combustion v (1996) (“[Tjhe 465, 468-469; App Mich 549 NW2d 364 retailer has responsibility payment the ultimate for the of sales tax. The General tax.”). places duty payment Tax Act no on a for the of the Sales consumer Andrie Inc v by Dissenting Opinion Zahra, J. on the lan- view, erroneously in relies majority, my 205.73(1) that in for the proposition MCL guage retailer. MCL actually tax to a pay consumer 205.73(1) states: selling tangible person engaged in the business of

A or hold out to personal property at retail shall advertise manner, directly indirectly, that the tax public any as an element imposed under this act is not considered any prohibit This act does not price to the consumer. by adding reimbursing to taxpayer himself or herself any this act. tax levied the sale provision permits that majority believes “adding. . . actually to tax consumers retailers act to the sale Not so. As stated by” price. tax levied itself, for a tax in the this is reimbursement provision It is not a tax on pay the retailer must state. that Thus, requires the STE the consumer. when of this only interpretation reasonable paid, tax be it to the the retailer owed the tax and requires consumers says nothing The statute about what state. pay are only required because consumers must Both taxes are due and use never sales tax.17 solely remitted state. expres- to be “an

This Court has understood STE avoid of sales legislative pyramiding sion of a intent words, In other this Court reads and use tax.”18 205.94(l)(a) 205.52(1), 205.93(1), and MCL created to avoid double taxation on as a scheme statutes, these three same transaction. This is because whole, system completely create viewed as 205.52(1) (providing that sales tax “shall he collected from See MCL retail,” making persons engaged not from in the sales at all business business”). consumers, privilege engaging in that as it is a “tax for the 231, 237; Corp Treasury Dep’t, 644 NW2d Gen Motors

184 496 Mich 161 Dissenting Opinion Zahra, J. exempts liability consumers for a 6% use tax a the retailer.19 paid by 6% was In a attempts respect Legislature’s series of transactions, intent not to double-tax this Court has created several presumptions help retailers con- sumers pay determine who must the 6% tax. For in example, World Book v Dep’t Treasury, Court chose to danger “lessen[ ] the of double taxation” by creating presumption that “a sales transaction is sales, subject use, to a not a tax” when the transaction “was consummated within the state” since “[o]nly transaction consummated within is a taxable ” ‘sale at retail’ under the statute.20 This Court in World Book reasoned that such a presumption clarify would tax, transactions on which sales as opposed to use tax, was due.21This Court held that sales tax was not due on an out-of-state transaction and that purchas- ers were therefore required pay use tax.22The Court Appeals employed similar Combus- tion Engineering Dep’t Treasury,23 The court held that a purchased consumer who retailer, item from a of which reflected the value of the sales was entitled to a presumption that it need pay use tax on the item.24The court Combustion Engineering came to the conclusion that there no statutory 19 actually paid by retailer, But since the tax must be 205.94(l)(a) open possibility Treasury leaves can recover a use tax from the consumer on the occasion the retailer breaks the law and fails to sales tax. Book, World 459 Mich at 410-411. See id. at 408-409, 411, 413-418. Id. Engineering, Combustion App Mich 465. 24 Id. at Engineering 468. The court in Combustion prey fell to the same colloquialism majority incorrect does: it referred to consumers paying sales tax to retailers. As noted, only paid taxes are Dissenting Opinion Zahra, J. [value that the consumer “prove that the requirement actually remitted to vendors was tax it paid the] sales retailer has is because “the This to the state.”25 tax,” of sales payment for the responsibility ultimate duty on a Act no places Sales Tax General “[t]he tax.”26 of the [sales] the payment for consumer 205.73(1), GSTA, MCL of the provision Another for solely responsible that retailers are makes it clear into the consumer and cannot mislead sales tax paying retail sale. on а tax believing that sales 205.73(1) from “ad- retailers prevents MCL Specifically, manner, any public out to the holding] or vertising] considered tax] is not indirectly, [sales or directly In Swain the consumer.” in the price as an element Dev,27 held that this Court Lumber Co v Newman 205.73(1) paying the burden of placing the effect of has mistakenly retailer, if the retailer on the even The bar in an exemption. that it was entitled to believed 205.73(1) holding] “advertising] on retailers’ as an element is not considered [sales tax] out.. . that affects the therefore in the to the consumer” of a in the absence goods: contract parties’ impliedly promised a retailer has contrary agreement, Treasury.28 sales addressing no Although express provision there is there are must that a retailer prove who imply UTA that in the GSTA and the provisions several retailers, that burden on Legislature placed that the has hy only thing government, the consumer to retailers. The remitted never tax. to the retailer was the value of the sales 25 Id. at 469. 26 Id. at 468-469. Dev, 437; 22 Mich NW2d Co v Newman Swain Lumber

28 Id. at 441. 496 Mich Dissenting Opinion by Zahra, J.

not on nonretailer consumers. re- recordkeeping quirement currently the GSTA states: person A imposed liable for [the under Sales keep Tax] Act complete beginning shall ... an accurate and inventory purchase and annual records of additions to inventory, complete daily records, receipts, invoices, lading, bills pertinent and all documents in a form the department requires. If an from the tax under by person this act is claimed because the sale is for resale retail, at kept a record shall be of the sales tax license person number if the has a sales tax license. These records period years shall be retained for a of 4 after the tax imposed under apply this act to which the records is due or law.[29] provided by as otherwise This provision requires only persons liable for sales (that retailers)30 is, “keep accurate and complete beginning and annual inventory and purchase records of. .. daily records, receipts, invoices, bills of lading, and all pertinent documents a form the department requires.”31 Overall, the above provision, 205.68(1), MCL requires these retailers retain only records a period “for of 4 years after the [sales tax] is due or as otherwise provided by law.” 205.68(1) Accordingly, MCL a system creates under which retailers will have complete records of the trans- actions upon which they have and have not paid sedes tax.

The UTA also includes a recordkeeping requirement, which currently provides: 205.68(1). MCL provision We note that this has been amended several period times and case; renumbered since the at issue in this

however, changes analysis. those do not affect our See MCL 205.67 as by amended 1995 PA 255. 205.52(1). 205.68(1). Treasury by Dissenting Opinion Zahra, J. tangiblе personal selling in the business person A Tax] act shall [Use this any tax under liable for property and annual inven beginning and complete keep ... accurate inventory, complete records of additions tory purchase invoices, lading, and all records, receipts, bills daily sales If requires. department in a form the documents pertinent by person because tax is claimed exemption from use kept the sales tax retail, be a record shall resale at is for sale tax license. These person has a sales if the number license years the tax period of 4 after for a retained records shall be apply is due or as the records act to which imposed under this law.[32] provided otherwise Legisla- requirement, recordkeeping this Under “in the both who is any person requires ture and liable tangible personal property selling business “daily sales is, keep use tax —that for” retailers — Like invoices, lading.”33 and bills of records, receipts, GSTA, this provision in the recordkeeping provision retained tax records be that use only requires years.34 for four retailers

II. ANALYSIS and the UTA and the GSTA the structure of Based on avoid double presumptions create the cases that consumer nonretailer taxation, I that a conclude that sales tax was to a rebuttable entitled pre- rebut if it was due. evidence, circumstantial some sumption by produсing or that otherwise, the tax was that, belief an erroneous transacted with consumer ex- to be the transaction have entitled true, would is rebut- the sales tax. Once empted present to to the consumer returns ted, the burden 205.104a(l). MCL 33Id. 34Id. Mich 161 Dissenting Opinion by Zahra, J. that actually paid

evidence sales was or to that the consumer properly establish was entitled to some exemption. other

A. THE OF BURDEN RECORDKEEPING The GSTA and the UTA not do state who bears the burden of proving actually by sales for purpose attaining retailer of But STE. between 205.68(1) recordkeeping requirements, two MCL 205.104a(l), above, the Legislature clearly created a system which retailers are charged keeping with four years the records that document whether sales tax actually and use were paid on item. Retailers are charged keeping also with track of and annual “beginning inventory and purchase inventory, records of additions to complete daily records, receipts, invoices, [and] bills lading.”35 requirements These recordkeeping permit the Treasury to determine whether retailer has correct amount of sales tax during years the four are retailers required keep such records.36 view, In my it is noteworthy Legislature did not decide to put similar recordkeeping requirements on consumers. Under the expressio unius est exclusio rule of statutory construction, alterius a statute’s ex- press mention of thing one the exclusion implies other things.37 Thus, similar by choosing to impose recordkeeping requirements on retailers that would 205.68(1). 205.104a(l) (requiring See also MCL retailers keep “beginning inventory purchase records of and annual records of inventory, complete daily records, invoices, receipts, additions lading”). [and] bills 205.52(1) (requiring “equal See MCL retailers a tax to 6% of gross proceeds business, plus penalty and interest act”). applicable provided law, less deductions allowed Bradley Community Ed, v Saranac Bd 285, 298; Sch See 565 NW2d 650 Treasury Opinion by Dissenting Zahra, J. determine whether sales Treasury permit not to item, chose Legislature indeed on was (and thereby prove) document consumers require actually paid. tax was whether the two statutes. parts other reading This fits with retailers though prohibits the GSTA example, For in any holding] public out to “advertising] or not tax] that is indirectly, [sales manner, directly to the con- in the as an element considered the cost of sales require that sumer,”38 it also does Rather, a retailer to the consumer. tax be passed an item without the sales tax on pay choose to of the tax from the value collecting benefit of may elect to differently, the retailer Stated consumer. By permitting pocket.39 the tax out of its own created a this, Legislature such as situations knowledge have no a consumer would scheme which tax tо remitted sales actually a retailer about whether decided this, Legislature Treasury. Despite on nonre- recordkeeping requirements against putting tailer consumers. Treasury proposes case, the rule that

In this demon- intent Legislature’s of the runs afoul structure of the statutes. language strated Andrie, a nonretailer that Treasury The demands from which consumer, that the retailers prove maintenance, fuel, supplies, provisions, purchased tax to the state. actually remitted sales and repairs rule, I in- Treasury’s proposed to the regard With The this? prove means can a consumer By what quire: unconvincing. question to this Treasury’s answer “business” consum- suggests only Treasury prove ers, Andrie, required should be like 205.73(1). 39Id. 496 Mich 161 Dissenting Opinion Zahra, J. actually remitted state. The Treasury suggests also this should be easy business consumers to because prove keep businesses records of their transactions ‍‌‌‌​‌‌​‌‌​​​‌‌​​​‌​‌​‌‌‌‌‌​​​​​‌​‌‌​‌‌​​​‌​‌‌​​‌‍receipts, and the easily value of sales tax is included as a line item on receipts. I with the disagree for two rea- First, sons. the GSTA and UTA do not distinguish between consumers business and individual consum- by ers.40 The distinction the only made statutes is between retailer consumers and nonretailer consum- ers;41 Second, can be Treasury businesses either. overlooks the fact that requirement there is no retailers include the value of the tax on the receipt pass or cost of along purсhaser. sales tax to the As previously stated, a retailer may choose to pay sales tax out of If does, its own it pocket.42 may a consumer be left with no proof that the retailer meant to remit believed that it owed sales tax. with problem Treasury’s rule, proposed

therefore, it effectively is that eliminates the STE unless and until consumer can produce documenta- tion that party paid another what it owed to the state. The Treasury not, however, does suggest how con- sumer ought go information, about such collecting which be would not available until sometime after the Treasury’s sale. The proposed rule is even more troublesome in this case because even retailer no longer whether know sales tax because retailers are required to for keep years records four 205.94(l)(a). See, e.g. MCL 205.68(1) retailers, (requiring See they all whether or not are 205.104a(l) (same). consumers, records); keep 205.73(1) (permitting, requiring pass See MCL but not retailers along purchaser “adding cost of the sales to the sale act”). any [Sales Tax] tax levied this Treasury Andrie Opinion by Dissenting Zahra, J. prove Here, required only.43 on some transactions retailers its This years prior.44 than four more that occurred recordkeep- only places The statute unacceptable. retailers, are they if also on consumers ing burden years. four for place remains only burden did not Legislature nearly certain that It seems retain consumers to nonretailer require intend to less Thus, likely it is records. even and sale purchase keep that consumers intended Legislature as the years, than four longer such records Andrie. from majority requires TAXATION B. DOUBLE AVOIDING every would Treasury’s require rule Because something outside the occurrence of prove consumer to (that actually remit- retailers of the consumer’s control presents tax to the the rule Treasury), ted sales consumers high taxation. The cost likelihood of double they forced to demand and collect will face are from whom every retailer affidavits or returns make they prospect will often purchased have alternative. only viable economic double taxation costs, incur there willing Even if a consumer is such retailer with the comply no would guarantee majority, com- request. As conceded purchaser’s grace come at the request with such “would pliance and uncer- high Faced with such a cost the retailer.” it is less trouble to tainty, may decide that consumers 205.104a(l). 205.68(1); See MCL Treasury period Andrie the tax conducted audits of 2004, 31, 1, ending beginning December for the 1999 and November ending July 31, beginning January 2006. period If taxes, then at least Treasury auditing its 2006 was years than four old. 1999-2001 taxes were more 496 Mich 161 Dissenting Opinion Zahra, J. pay use tax to the demand, upon even if the consumer believes that the retailer paid sales tax. prevent

To the risk of double cases, taxation other this Court has employed presumptions clarify who is liable for sales tax and who is liable for use tax. For example, Book, World this court employed pre- sumption that “a sales subject transaction is a sales, use, not a tax” when the transaction “was consum- mated within the state” “[o]nly because a transaction consummated within Michigan is a taxable ‘sale at retail’ [the under statute].”45 The Court of Appeals utilized a similar presumption in Combustion Engineer- ing, holding that a consumer was entitled to a presump- tion that it need not pay use tax on a transaction when the consumer had purchased an item from a retailer with the value of the sales tax included on the receipt.46

The instant case is similar to Combustion Engineer- ing, which recognized that although sales tax must be paid before a consumer is entitled STE, consum- ers should be afforded a presumption paid, despite the fact that the consumer in that case could prove that the retailer actually paid the tax it owed. The only difference between this case and Com- bustion Engineering is that in Combustion Engineering, it was clear that the retailer passed had the cost of the sales tax on to the consumer via an increase in purchase price. At most this suggests that the retailer realized that sales tax case, was due. In this Andrie’s receipts are devoid mention of Thus, sales tax. it is unclear 45Id. The Court in World Book reasoned that such a clarify would upon tax, opposed transactions which sales to use 408-409, 411, was due. Cf. id. at (holding 413-418 that sales tax was not due on an purchasers out-of-state transaction and that were tax). required therefore use Engineering, App Combustion at 468. 193 by Dissenting Opinion Zahra, J. Andrie the value charged Andrie’s retailers whether pockets, tax out of their own the sales the sales transaction exempted believed sales tax. THE STE APPLY TO BROS SHOULD NOT THE RULE OF ELIAS

C. direction Notwithstanding Legislature’s clues retailers, the textual only on imposed tax be provisions statutory recordkeeping in the found employing presumptions jurisprudence this Court’s erroneously relies taxation, majority double against for its Treasury Dep’t v Elias Bros Restaurant are disfa- exemptions “[b]ecause proposition an exemp- entitlement to vored, proving the burden of right asserting . the party tion rests on.. holding the Elias Bros I do not believe

exemption.”47 STE, which is a different extended to the should be Bros. Elias from the discussed exemption exemption applied Bros has never been Indeed, the rule Elias behind STE, good purpose reason —the applied when simply rule is served Elias Bros STE. judicial in Elias Bros is a that the rule significant

It is are not Judicial rules rule, statutory not a rule.48 47 Brоs, at Elias 452 Mich 150. 48 judicial traced back via citation cited Elias Bros can be rule 128, 137; (1960), Nims, 186 but NW2d to Romeo Homes See, e.g., City v Detroit Commercial than that. Detroit the rule is older (1948) (“[T]he 142, 149; College, burden is on Mich 33 NW2d 737 .”); Engineering clearly right exemption ... to establish his claimant (1944) (“The Detroit, 539, 542; Mich NW2d 79 Detroit v Soc of given establishing is a scientific or [that the fact institution burden of meaning the tax stat within the educational institution .”). College, reading plaintiffs Upon Commercial .. . Detroit utes] rests on adopted supported Court has clear that the rule that this it becomes hornbooks) (or perhaps about how several a hornbook 496 MlCH Dissenting Opinion J. Zahra,

accorded the same weight as statutory rules.49 Had the Legislature enacted part as of its tax structure a provi- sion that all tax declaring are exemptions disfavored and placing on the party seeking to invoke an exemp- tion the proving burden of it, entitlement this Court would be required to apply and follow this legislative directive without further consideration. But because Elias Bros is a judicially rule, created this Court can and should consider whether this rule should be ex- tended to the STE.

This Court crafted the Elias Bros rule because the GSTA and the UTA do not describe who bears the burden of proving entitlement to the various exemp- tions available under the UTA. In general, the Elias Bros rule is premised on the notion that “tax exemp- tions .. . represent the antithesis of tax equality.”50 is, That the tax structure assumes taxpayers will be taxed according and, to law when an exemption is employed, tax inequality results because taxpayer invoking the exemption is paying less than those not afforded the exemption.

The majority claims that creating presumption that sales tax was if it was due will violate the rationale of the Elias Bros rule because it will tend to create inequality by favoring a tax exemption. fact, In to apply the Elias Bros rule to STE, does, the majority would have the effect of creating greater inequality of taxation. As explained previously, Legislature cre- interpret tax codes. College, 148-149, See Detroit Commercial 322 Mich at (4th citing Cooley Ed), p § on Taxation 672. Because this Court rule, never judicial cites to a statute rule, to defend the it is a not a statutory one. 49 See, e.g., People Goldston, (2004) 523, 541; 682 NW2d 479 (referring exclusionary “judicially to the rule as created” and “nonbind ing”). Bros, Elias 452 Mich at 150. Opinion by Dissenting Zahra, J. together tax that tax and use of sales system ated a for the sale of each transaction tax on creates one 6% applies If this Court Michigan. personal property be forced to STE, consumers to the Elias Bros tax to the actually paid retailers that their prove retailer Michigan presumes This rule state. due, tax when it was paying the law violated “presumption, law to the common сontrary which law, shall [which] has conformed every man that pre- to shake appear shall something till stand that a Furthermore, unlikely it is also sumption.”51 retailer complied prove consumer could will unlikely that consumers Because it is the law. with rule the Elias Bros compliance, retailer prove be able to Legisla- property taxation on in double will result is, it is That since only once. to be taxed ture intended by add- reimburse themselves for retailers to common if price, tax to the retail of the sales the value ing that their retailer prove cannot consumer forced to both consumer could be state, that to tax and of the sales retailer for the value reimburse the differently one consumer This would treat use tax. inequality. consumers, leading greater to other than 51 (2005); States, 736, id. n 26 see also Inc v United 66 Fed Cl 758 Tecom Supreme (citing English United States Court law and common at 758 presumed persons that are precedent for the maxim from the 1800s appears to the and until evidence to the law unless have conformed “Omniapraesumuntur legal contrary). appropriate maxim for this is The contrarium,” rite, probetur mean legitime, esse acta donee solemniter formally lawfully, properly, things presumed ing are to have been “All Gardner, Gray v contrary.” done, proof See also be made to the until legitime (1807) {“Omniapresumuntur esse actа donee rite et n 1 Mass 399 (1873) Streetman, 71, probetur."); cf. v Tex Tucker in contrarium (“[I]n party presumed acted to have of life ... a is the civil relations contrary proven.”). legally until law. See Palmer recognized presumption is also This 1847). (Mich, Oakley, Doug 496 Mich 161 Dissenting Opinion by Zahra, J. The rule simply Elias Bros is not useful when applied to the STE does not possess because consumer is, information it will be forced to infor- produce —that actually mation about whether a retailer remitted the state the sales tax due. On the contrary, as previ- established, ously such would if costly, information be impossible, not for the majority of consumers to obtain. It serves no for this Court to extend Bros purpose Elias on its so force own initiative it can consumers produce they information do have and cannot obtain with at a certainty reasonable reasonable cost.

D. THE AND THE PRESUMPTION REBUTTING PRESUMPTION Because the and UTA already GSTA supply record- keeping requirement, and since this Court interprets those in way taxation, Acts that double I avoids conclude Court that this should afford consumers if presumption transaction, sales tax was due on a actually paid by Nonetheless, the retailer. the Treasury should be able to rebut such a presump- tion.52 Treasury may rebut producing evidence, otherwise, some circumstantial or sales tax was not or that the consumer transacted that, true, with an erroneous belief would have the transaction exempted from sales tax. Once rebutted, presumption is burden returns consumer to present evidence that the sales tax was actually paid or to the establish that consumer was to properly entitled some other exemption. 52 Although the critical of notion that the consumer should be entitled presumption, noting majority

to a applies it is worth also a presumption, just propose. it different one than the one I I Whereas apply presumption paid by would that sales tax was a retailer if it was due, majority apply by presumption paid would that sales tax was charged a retailer if the retailer the value of the to the consumer. Treasury Dep’t Inc v Andrie by Opinion Dissenting Zahra, J. evidence case, Treasury presented has In this was that sales tax presumption rebut the sufficient there is circumstantial Specifically, the retailer. contracting parties one of the at least evidence that sale, that would time of the facts at the represented, fuel, provisions, supplies, the sales exempted have tax and use maintenance, from both sales repairs and light came to at evidence tax. This circumstantial fuel, Claims, provi- claimed that its as Andrie Court entitled maintenance, repairs and were sions, supplies, 205.94(l)(j), under which MCL exemption to a use fuel, and provisions, supplies, purchases exempts repair ves- to maintain and required tangible property tonnage registered use of “designed for commercial sels from exempted Any purchase or more.”53 500 tons an excep- also for 205.94(l)(j) qualifies in MCL use tax 205.54a(d).54 Therefore, tax under MCL tion sales did not pay is evidence that the retailer because there item, rebutted the has sales paid. that sales tax presumption I record, conclude that portion on this of the Based its is not entitled to for tax on the transactions actually retailers maintenance, repairs and fuel, supplies, provisions, 205.94(l)(j). MCL an under exemption which claimed actually paid If that the retailers prove Andrie cannot I Treasury. Andrie must remit use tax Appeals qualify did for this held that Andrie The Court of Andrie, Treasury Dep’t, App exemption, 365-366 see Inc among (2012), those be briefed did not include issue and this Court Andrie, Treasury, Mich 900 parties. See Complaint, Tax “Both the Sales Andrie stated: In its First Amended tax for provide from sales and use Tax Act Act and Use produced upon that are used in interstate commerce commercial vessels fuel, tangible property provisions, supplies special for the order and 205.54a(d); repair required the vessel. maintain 205.94(1)©.”. 496 MICH161 Dissenting Opinion Zahra, J.

would remand this case to the trial court for further ‍‌‌‌​‌‌​‌‌​​​‌‌​​​‌​‌​‌‌‌‌‌​​​​​‌​‌‌​‌‌​​​‌​‌‌​​‌‍proceedings consistent with this dissent.55

III. CONCLUSION 205.52(1) only Because MCL places the burden of retailers, tax on pаying consumers, sales and not on this Court should afford consumers a that retailers if actually paid sales tax it is evident that sales tax was I due under the statute. permit would the state to rebut this some presumption by producing evidence, otherwise, circumstantial or that the tax was not or the consumer transacted with erroneous that, true, belief would have entitled transaction exempted be from sales tax. Once the presumption is rebutted, the burden returns to the consumer present evidence that the was actually paid or to establish that the consumer was properly entitled to some other I exemption. would remand to the trial court for further proceedings consistent with opin- I ion. jurisdiction. would retain 55 Andrie, prove on the that it occasion is not able to that sales tax was paid, may implead any purchased be able retailer from whom it fuel Lumber, sue for Swain generally relief based in contract. See Mich 437. argument Andrie be also able to make an still proving bears burden was not on sales that years prior Treasury’s occurred more than four demand that recordkeeping use tax. require- This is because the statutes’ only ment that retailers years retain their sales records for four could impossible make it difficult for a nonretailer consumer to obtain an actually paid, thereby leading affidavit from a retailer that sales tax was to double taxation.

Case Details

Case Name: Andrie Inc v. Department of Treasury

Court Name: Michigan Supreme Court

Date Published: Jun 23, 2014

Citation: 853 N.W.2d 310

Docket Number: Docket 145557

Court Abbreviation: Mich.