In this tax dispute, we must decide whether a subchapter S corporation 1 is a “corporation” within the meaning of MCL 208.3(3), § 3(3) of the Single Business Tax Act (SBTA), MCL 208.1 et seq. The Court of Claims ruled that § 3(3) is ambiguous and concluded that an S corporation is not a corporation within the meaning of § 3(3). We disagree, reverse in part, and remand for further proceedings. We hold that § 3(3) of the SBTA is clear and unambiguous and that the term “corporation” as used in that subsection includes S corporations.
I. FACTS AND PROCEDURAL BACKGROUND
Plaintiff is a subchapter S corporation headquartered in Delaware with its principal office located in Rochester Hills, Michigan. Beginning in the 1980s, plaintiff, then known as Electro Wire Products, Inc., was engaged in the business of designing, manufacturing, and assembling electrical distribution systems for automotive, *169 truck, and industrial applications. Plaintiffs design and manufacturing facilities were located in Michigan and its assembly facilities were located throughout the United States and Mexico. Plaintiffs primary, and nearly exclusive, automotive customer was the Ford Motor Company. Because plaintiff was and is engaged in business in Michigan, it is subject to the SBTA.
In the early 1990s, plaintiff sought to expand its operations and considered becoming a publicly held entity as opposed to a privately held company. Ford, however, discouraged plaintiffs plans and encouraged plaintiff to sell its assets to plaintiffs competitor, Alcoa Fujikura, Ltd. Subsequently, plaintiff sold all its manufacturing assets to Alcoa on July 1, 1995, including plaintiffs name, “Electro Wire Products, Inc.” Plaintiff accepted a lump sum payment at the time of sale, realizing a gain of $237,059,325. The sales contract also provided that plaintiff would receive certain payments contingent upon performance levels in 1995 and 1996. These levels were never met and, as a result, plaintiff never received the payments.
After the sale, plaintiff became known as “TMW Enterprises Inc.” and ceased any designing, manufacturing, or assembly activities. However, because Alcoa did not purchase the properties upon which plaintiffs facilities were located, plaintiff remained as an entity solely for the purpose of managing that real estate. Eventually, plaintiff also became engaged in the business of management consulting.
Subsequently, defendant decided to audit plaintiffs single business tax returns during the tax years beginning January 1, 1993, and ending December 31, 1995. Plaintiff filed a single business tax return for each of these years. For the 1995 tax year, plaintiff did not include the $237,059,325 gain from the asset sale be *170 cause plaintiff believed that it should be excluded as a “casual transaction” under § 4(1) of the SBTA, MCL 208.4(1). 2 Defendant, however, disagreed that the gain from the asset sale should be excluded. Rather, defendant determined that plaintiff should have included the gain from the asset sale in its 1995 tax base because plaintiff did not qualify for the casual transaction exclusion. As a result, defendant assessed plaintiff a single business tax in the total amount of $1,064,612.19, including interest and a negligence penalty fee. Plaintiff paid this amount under protest.
Plaintiff then filed suit in the Court of Claims, seeking a refund of the amount paid, plus statutory interest. Plaintiffs complaint alleged that the asset sale should not be included in the tax base because it was a casual transaction; that because plaintiff is an S corporation, as opposed to a “corporation” within the meaning of § 3(3) of the SBTA, MCL 208.3(3), it should be allowed to exclude the casual transaction from its tax base; and that defendant unlawfully assessed a negligence penalty.
The matter proceeded to a bench trial, after which the parties submitted posttrial briefs. Defendant argued that because plaintiff is an S corporation, it was not entitled to claim the casual transaction exclusion because all corporations are precluded from claiming this exclusion pursuant to the unambiguous language of the SBTA. Plaintiff countered that S corporations, like itself, are permitted to claim the exclusion.
The Court of Claims agreed with plaintiff and, relying heavily on the statute’s legislative history and related amendments of federal law, found that the statute was ambiguous. It stated:
*171 [I]t is unclear if an S-Corporation is entitled to claim the casual transaction exemption. On one hand MCL 208.3(3) explicitly states that “business income” means federal taxable income for corporations, and that only persons other than corporations look to business activity to calculate their business income for SBT [single business tax] purposes. On the other hand, S-corporations, like partnerships, have no federal taxable income, making a calculation of business income based solely on federal taxable income for S-corporations nonsensical.
In the court’s view, to read § 3(3) to mean that S corporations calculate their “business income” on the basis of federal taxable income would result in S corporations avoiding all SBT liability. The court concluded that “only C-corporations [are] to calculate their business income based only on federal taxable income [whereas] S-corporations and other non-corporate entities are to calculate their business income based on business activity.” As a result, S corporations, the court determined, “are entitled to claim the casual transaction exclusion.” The court then determined that plaintiffs one-time asset sale constituted a casual transaction and that the negligence penalty was unlawful. The court awarded plaintiff a refund plus any overpaid interest. 3 This appeal followed.
II. STANDARDS OF REVIEW
Because the question presented on appeal is one of statutory construction, our review of the lower court’s conclusions of law is de novo.
JW Hobbs Corp v Dep’t of Treasury,
III. SBTA
On appeal, defendant argues that S corporations are corporations within the plain and unambiguous mean *173 ing of the SBTA and as a result are not entitled to the casual transaction exclusion. We agree. Because an understanding of the relevant tax law will inform our decision, we first discuss the purpose and applicability of the SBTA.
A. APPLICABLE LAW
The purpose of the SBTA
4
is to impose a tax upon the privilege of conducting business in Michigan.
Tyson Foods, Inc v Dep’t of Treasury,
The starting point for calculating tax liability under the SBTA is determining a person’s “tax base.” This is because the SBTA imposes a “specific tax upon the adjusted tax base of every person with business activity
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in [Michigan]” at a specified rate determined by the statute. MCL 208.31(1).
5
“For ease of administration . . . the SBTA uses the federal income tax system as a reference and starting point and.. . converts [a person’s] federal tax base into a consumption-type VAT base.”
Mobil Oil Corp v Dep’t of Treasury,
business income, before apportionment or allocation as provided in chapter 3, even if zero or negative, subject to the adjustments in this section. [MCL 208.9(1) (emphasis added).]
And, in turn, “business income” is defined by § 3(3) and means
federal taxable income, except that for a person other than a corporation it means that part of federal taxable income derived from business activity. For a partnership, business income includes payments and items of income and expense which are attributable to business activity of the partnership and separately reported to the partners. [MCL 208.3(3) (emphasis added).]
Thus, if a person is a corporation, its business income is its federal taxable income, which in turn is also its tax base. However, if a person is not a corporation, then its business income is determined by looking to “that part of federal taxable income derived from business activity.” MCL 208.3(3). Further, § 3(3) goes on to specify that a partnership’s business income is based solely on its business activity. The SBTA defines “business activity” as
a transfer of legal or equitable title to or rental of property, whether real, personal, or mixed, tangible or intangible, or *175 the performance of services, or a combination thereof, made or engaged in, or caused to be made or engaged in, within this state, whether in intrastate, interstate, or foreign commerce, with the object of gain, benefit, or advantage ... but shall not include ... a casual transaction. [MCL 208.3(2) (emphasis added).]
Accordingly, a person “other than a corporation” and a partnership are entitled to exclude “casual transaction[s]” 6 from their tax bases because the computation of their business incomes does not include, by definition, casual transactions. MCL 208.3(3); MCL 208.3(2); see also Manske, supra at 461-462 (concluding that the plaintiff, a partnership, properly excluded a “casual transaction” from its tax base). Conversely, and as this Court has already acknowledged, a corporation is not entitled to the casual transaction exclusion because its business income is determined by its “federal taxable income” and not by its “business activity.” MCL 208.3(3); Guardian Photo, Inc, supra at 279-280.
B. ANALYSIS
As noted, the fundamental disagreement in the present dispute is the meaning of the term “corporation” as used in § 3(3) of the SBTA. Our resolution of this matter turns on the statutory language of § 3(3). As previously stated, this provision provides that “business income” means
federal taxable income, except that for a person other than a corporation it means that part of federal taxable income *176 derived from business activity. For a partnership, business income includes payments and items of income and expense which are attributable to business activity of the partnership and separately reported to the partners. [MCL 208.3(3) (emphasis added).]
At the outset, we note that the SBTA does not specifically define the word “corporation.” When a statute does not define a word, we may consult dictionary definitions. Alvan Motor Freight, Inc, supra at 43. Corporation is broadly defined as “[a]n entity .. . having authority under law to act as a single person distinct from the shareholders who own it and having rights to issue stock and exist indefinitely; [or] a group or succession of persons established in accordance with legal rules into a legal. . . person that has legal personality distinct from the natural persons who make it up ... .” Black’s Law Dictionary (8th ed). Notably, this definition makes no distinction between different types of corporate entities. Equally significant is the Legislature’s explicit choice not to differentiate between different kinds of corporations; rather, the Legislature simply used the word “corporation.” Given the Legislature’s choice not to parse or to further define the term, it is self-evident that the term “corporation,” as used in § 3(3), encompasses all types of corporations. Further, the term “corporation” is not susceptible to more than one meaning, nor does it create an irreconcilable conflict with another provision. See Fluor Enterprises, Inc, supra at 177 n 3. Accordingly, we hold that an S corporation is a corporation within the plain meaning of § 3(3). It follows that if an entity is a “corporation,” like plaintiff, then its business income is its federal taxable income, however that number may be calculated, and it is not entitled to exclude casual transactions from its tax base. MCL 208.3(2); MCL 208.3(3); see also Guardian Photo, Inc, supra at 279-280. Because the provision *177 is plain and unambiguous, the Court of Claims erred by finding otherwise and impermissibly engaging in judicial construction. 7 See id. at 277.
On appeal, however, plaintiff posits that § 3(3) is ambiguous. According to plaintiff, this provision became ambiguous after the United States Congress amended federal tax law so that S corporations no longer have any federal taxable income at the entity level. However, when the language of a provision is clear, reliance on the statute’s legislative history and related laws is not permitted.
Oneida Charter Twp v Grand Ledge,
Further, there is no merit to plaintiffs argument that because it has no federal taxable income at the federal level, the Legislature must have intended that its business income be computed by looking to its “business activity.” Plaintiff essentially repeats the *178 argument it posited before the Court of Claims: that it would be “nonsensical” to read the statute as requiring S corporations to determine their business income by looking to their federal taxable income because it would result in plaintiff and S corporations avoiding all SBT liability since S corporations have no federal taxable income. It is true that S corporations have no federal taxable income at the federal level, as the parties concede. However, whether an S corporation has “federal taxable income” at the federal level is irrelevant because the plain language of the statute controls. As we have stated, the Legislature’s intent is clear: If an entity is a “corporation” under § 3(3), its “business income” is calculated by reference to its “federal taxable income,” however that number is computed, and it is not entitled to exclude casual transactions. See MCL 208.3(2); MCL 208.3(3).
Lastly, plaintiff argues that because defendant’s written guidance and SBT return instructions instruct S corporations to calculate their business income on the basis of federal income deriving from business activities, just like partnerships, S corporations should not be considered corporations under § 3(3). This argument is also unavailing. Defendant’s written guidance and SBT return instructions are not promulgated rules and do not carry the force of law. See
Faircloth v Family Independence Agency,
*179 In light of our conclusion that all corporations under the plain language of § 3(3) of the SBTA must determine their business incomes by looking to their “federal taxable income,” it is unnecessary for us to address the arguments raised regarding whether the asset sale constituted a “casual transaction” because a “corporation” is precluded from claiming the “casual transaction” exclusion. See Guardian Photo, Inc, supra at 279-280.
IV NEGLIGENCE PENALTY
Defendant next contends that the Court of Claims erred by determining that the negligence penalty was unlawful and by ordering a refund of the penalty amount. The Court of Claims’ ruling in this regard was based largely upon its conclusion that because § 3(3) is ambiguous, plaintiff could not have been negligent when it claimed the casual transaction exclusion. However, because we have determined that § 3(3) is clear and unambiguous and plaintiff is ineligible for the casual transaction exclusion, the court’s ruling regarding the negligence penalty was legally erroneous. Accordingly, we reverse the court’s findings and conclusion with respect to the negligence penalty and remand for a new hearing. 8
V CONCLUSION
Plaintiff has sought to compel this Court to correct
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what plaintiff perceives to be the Legislature’s oversight in failing to modify § 3(3) when federal tax law was amended. This would require this Court to read the term “corporation” to mean “C corporations” as the Court of Claims did. But we will not read additional requirements into a clear and unambiguous statute that are not within the Legislature’s manifest intent.
Bay Co Prosecutor v Nugent,
Reversed in part. Remanded for further proceedings consistent with this opinion. We do not retain jurisdiction.
Notes
Section 1361 of the Internal Revenue Code defines an S corporation as a “small business corporation ....” See 26 USC 1361(a)(1).
Plaintiff did include this gain in its federal taxable income.
After the court issued its opinion, plaintiff moved for reconsideration because the court failed to include statutory interest on the amount wrongfully collected, as requested in plaintiffs original complaint. See MCL 205.30. The court granted the motion and awarded plaintiff the statutory interest.
The SBTA was repealed in 2006.
For the years at issue up to October 1, 1994, the SBTA imposed a 2.35 percent rate. MCL 208.31(1)(a). After September 30, 1994, the rate was 2.30 percent. MCL 208.31(1)(b).
The SBTA defines “casual transaction” as follows:
“Casual transaction” means a transaction made or engaged in other than in the ordinary course of repeated and successive transactions of a like character, except that a transaction made or engaged in by a person that is incidental to that person’s regular business activity is a business activity within the meaning of this act. [MCL 208.4(1).]
The Court of Claims’ reasoning failed to recognize that while the application of certain language to a given set of facts may be difficult, this does not make the words themselves ambiguous.
Oneida Charter Twp v Grand Ledge,
We note that on appeal plaintiff argues that defendant should be deemed to have admitted that the penalty was unlawful because defendant failed to answer the relevant portion of plaintiffs complaint. See MCR 2.111(E). Defendant, on appeal, has relied upon stipulated exhibits, presumably presented before the Court of Claims, but not contained in the record before us, to argue that plaintiff was negligent and no reasonable cause existed to justify a waiver of the penalty. Because we are vacating the court’s decision, we need not address these arguments, as they are more properly first addressed before the Court of Claims.