GMAC LLC v. TREASURY DEPT.
Decision Date | 03 December 2009 |
Docket Number | 289266.,Docket No. 289261,289262,289263 |
Parties | GMAC LLC v. DEPARTMENT OF TREASURY. Nuvell Credit Company LLC v. Department of Treasury. |
Court | Court of Appeal of Michigan — District of US |
COPYRIGHT MATERIAL OMITTED
Honigman Miller Schwartz and Cohn LLP (by Alan M. Valade, Detroit, June Summers Haas and John D. Pirich, Lansing) for plaintiffs.
Michael A. Cox, Attorney General, B. Eric Restuccia, Solicitor General, and Bruce C. Johnson, Heather M.S. Durian, Shenique A. Moss, Michael S. Newell, and Drew M. Taylor, Assistant Attorneys General, for defendant.
Robert S. LaBrant, Lansing, for the Michigan Chamber of Commerce.
Clark Hill PLC (by David D. Grande-Cassell), Lansing, for the Michigan Manufacturers' Association.
Willingham & Coté PC (by Raymond J. Foresman, Jr.), East Lansing, for the Michigan Automobile Dealers' Association.
Abbott Nicholson PC (by Robert Y. Weller, II), Detroit, for the Detroit Automotive Dealers' Association.
McClelland & Anderson LLP (by Gregory L. McClelland), Lansing, for the Michigan Association of Realtors.
Before: FORT HOOD, P.J., and MARK J. CAVANAGH and KIRSTEN FRANK KELLY, JJ.
Plaintiffs appeal as of right the order granting summary disposition in favor of defendant. In this tax dispute, plaintiffs contend that a refund should be awarded pursuant to the bad debt deduction, MCL 205.54i, as interpreted by this Court in DaimlerChrysler Services North America LLC v. Dep't of Treasury, 271 Mich.App. 625, 723 N.W.2d 569 (2006), despite the recent amendment to the statute clarifying the availability of the deduction. The Court of Claims held that the legislative amendment was clear and unambiguous and, therefore, plaintiffs were not entitled to the deduction. We affirm.
In DaimlerChrysler, supra at 627, 723 N.W.2d 569, the plaintiff financed consumer purchases of motor vehicles from participating dealerships. If the plaintiff agreed to finance the transaction, the consumer executed a retail installment sales contract with the dealership, and the dealer retained a security interest in the vehicle. The plaintiff and the dealership agreed that the plaintiff would pay the dealers all the amounts due under the contract, including the sales tax on the purchase price of the vehicle. In exchange, the dealers assigned all rights, titles, and interests in the motor vehicle purchase agreements to the plaintiff. However, the dealers remitted the sales tax to the defendant. The plaintiff was assigned the right to repossess the vehicles when consumers defaulted on the contracts. However, the plaintiff was unable to recover the balance due on some of the contracts. Consequently, the plaintiff determined that it had overstated its gross receipts as a result of uncollectible bad debt and sought a refund or deduction on the alleged overpayment. Id. at 627-628, 723 N.W.2d 569. The hearing referee and the Court of Claims denied the plaintiff's requested relief, concluding that the plaintiff, as the financing provider, did not constitute a taxpayer for purposes of MCL 205.54i, and that an assignee did not achieve the status of a person subject to the act and is not allowed a sales tax deduction under the act for bad debt. Id. at 628-630, 723 N.W.2d 569.
The Court of Appeals held that the plaintiff was a taxpayer under the statute, holding:
The Supreme Court denied the defendant's application for leave to appeal, 477 Mich. 1043, 728 N.W.2d 228 (2007), and also denied a motion for reconsideration, 478 Mich. 932, 733 N.W.2d 43 (2007).
In this case, plaintiffs, GMAC LLC and Nuvell Credit Company LLC, also provide financing for consumer purchases of motor vehicles sold by automotive dealerships in Michigan. Specifically, plaintiffs alleged that they provided financing to facilitate consumer purchases of automobiles from dealerships, which included Michigan sales tax. However, it was concluded that plaintiffs overstated their gross receipts as a result of bad debts. Because of the DaimlerChrysler decision, plaintiffs filed sales tax refund claims on September 21, 2007, and December 20, 2007. However, MCL 205.54i was amended to place limitations on the person that may be characterized as a "taxpayer" for purposes of the bad debt provision. 2007 PA 105. The amendment to MCL 205.54i also contains the following enacting provision:
Enacting section 1. This amendatory act is curative and shall be retroactively applied, expressing the original intent of the Legislature that a deduction for a bad debt for a taxpayer under the general sales tax act, 1933 PA 167, MCL 205.51 to 205.78, is available exclusively to those persons with the legal liability to remit the tax on the specific sale at retail for which the bad debt deduction is recognized for federal income tax purposes, and correcting any misinterpretation of the meaning of the term "taxpayer" that may have been caused by the Michigan Court of Appeals decision in Daimler Chrysler sic Services North America LLC v. Department of Treasury, No. 264323 271 Mich.App. 625, 723 N.W.2d 569 (2006). However, this amendatory act is not intended to affect a refund required by a final order of a court of competent jurisdiction for which all rights of appeal have been exhausted or have expired if the refund is payable without interest and after September 30, 2009 and before November 1, 2009.
The amendment to MCL 205.54i was approved and filed on October 1, 2007, given immediate effect, and expressly provided for retroactive application.
Unable to obtain a refund from defendant, plaintiffs filed complaints in the Court of Claims that requested tax refunds, relying on the DaimlerChrysler decision interpreting the bad debt deduction. The cases were consolidated, and following cross-motions for summary disposition, the Court of Claims denied plaintiffs' motion and granted defendant's motion for summary disposition, holding, in relevant part:
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