Hudsonville Creamery & Ice Cream Co. v. Dep't of Treasury

• Decision Date: 29 March 2016
• Docket Number: Docket No. 322968.
• Citation: 887 N.W.2d 641,314 Mich.App. 726
• Court: Court of Appeal of Michigan — District of US
• Parties: HUDSONVILLE CREAMERY & ICE CREAM COMPANY, L.L.C. v. DEPARTMENT OF TREASURY.

314 Mich.App. 726

887 N.W.2d 641

HUDSONVILLE CREAMERY & ICE CREAM COMPANY, L.L.C.

v.DEPARTMENT OF TREASURY.

Docket No. 322968.

Court of Appeals of Michigan.

Submitted Nov. 10, 2015, at Lansing.

Decided March 29, 2016, at 9:05 a.m.

Warner Norcross & Judd LLP, Grand Rapids (by Matthew T. Nelson, Christian E. Meyer, and Thomas M. Amon ), for petitioner.

Bill Schuette, Attorney General, Aaron D. Lindstrom, Solicitor General, Matthew Schneider, Chief Legal Counsel, and Emily C. Zillgitt, Assistant Attorney General, for respondent.

Before: METER, P.J., and BORRELLO and BECKERING, JJ.

BECKERING, J.

Petitioner, Hudsonville Creamery & Ice Cream Company, LLC, appeals as of right the decision of the Michigan Tax Tribunal (MTT), which granted summary disposition to respondent, Department of Treasury, and denied petitioner's motion for the same. At issue in this case is whether certain brownfield tax credits issued to petitioner under the former Michigan Single Business Tax Act (SBTA), MCL 208.1 et seq., are eligible for a refund under MCL 208.1437(18) of the Michigan Business Tax Act (MBTA), MCL 208.1101 et seq.¹ Because the common understanding of the term “credit,” as it is used in MCL 208.1437(18) encompasses a carryforward, and because that statute permits an 85% refund for credits, without limitation, we hold that petitioner was entitled to a refund of 85% of its brownfield credits in the 2008 tax year. Accordingly, we reverse and remand.

I. PERTINENT FACTS AND PROCEDURAL HISTORY

In 2005, petitioner invested over $8 million in an approved brownfield redevelopment project under MCL 208.38g(2). Respondent issued petitioner a certificate of completion, indicating that petitioner, a “qualified taxpayer” under the SBTA, was eligible to claim a brownfield redevelopment credit under MCL 208.38g. Accordingly, petitioner received $800,000² in brownfield redevelopment credits under the now-repealed SBTA.

Petitioner did not have any tax liability on its 2005, 2006, or 2007 SBTA returns, and as a result it did not have tax liability against which to apply its brownfield redevelopment credits. Having no SBTA tax liability for 2005–2007, petitioner carried forward its SBTA credits as allowed by former MCL 208.38g(15).³ Thereafter, the Legislature repealed the SBTA and implemented the MBTA for tax years beginning after December 31, 2007. See 2006 PA 325.⁴

This case involves MCL 208.1437(18) of the MBTA. As originally enacted, the statute permitted a qualified taxpayer to carry forward brownfield redevelopment credits earned under the SBTA, but did not permit a refund of those credits. However, the Legislature subsequently amended the act, 2008 PA 89, and allowed for a refund in certain situations. MCL 208.1437(18) provides:

Except as otherwise provided under this subsection, if the credit allowed under this section for the tax year and any unused carryforward of the credit allowed under this section exceed the qualified taxpayer's or assignee's tax liability for the tax year, that portion that exceeds the tax liability for the tax year shall not be refunded but may be carried forward to offset tax liability in subsequent tax years for 10 years or until used up, whichever occurs first. Except as otherwise provided in this subsection, the maximum time allowed under the carryforward provisions under this subsection begins with the tax year in which the certificate of completion is issued to the qualified taxpayer. If the qualified taxpayer assigns all or any portion of its credit approved under this section, the maximum time allowed under the carryforward provisions for an assignee begins to run with the tax year in which the assignment is made and the assignee first claims a credit, which shall be the same tax year. The maximum time allowed under the carryforward provisions for an annual credit amount for a credit allowed under subsection (4) begins to run in the tax year for which the annual credit amount is designated on the certificate of completion issued under this section. A credit carryforward available under section 38g of former 1975 PA 228 that is unused at the end of the last tax year may be claimed against the tax imposed under this act for the years the carryforward would have been available under former 1975 PA 228. Beginning on and after April 8, 2008, if the credit allowed under this section for the tax year exceeds the qualified taxpayer's tax liability for the tax year, the qualified taxpayer may elect to have the excess refunded at a rate equal to 85% of that portion of the credit that exceeds the tax liability of the qualified taxpayer for the tax year and forgo the remaining 15% of the credit and any carryforward. [Emphasis added.] ^{[5 ]}

When petitioner filed its 2008 MBTA tax return it claimed a credit of $71,306 against its MBTA liability and, pursuant to MCL 208.1437 (18), elected a refund of 85% of its remaining SBTA credits. At the time, petitioner sought a refund of $619,390⁶ on its 2008 MBTA tax return for its brownfield redevelopment credits.⁷

In December 2011, respondent denied petitioner's request for the $619,390 refund. Respondent took the position that the credit was nonrefundable and could only be carried forward. According to respondent, a qualified taxpayer could only elect a refund for the tax year in which a certificate of completion of the brownfield redevelopment was received. On petition to the MTT, the MTT drew a distinction between credits and credit carryforwards under MCL 208.1437(18), concluding that refunds are only available for credits and not for the carryforward of a credit that was earned under the SBTA. On this basis, the MTT granted respondent's motion for summary disposition and denied petitioner's motion for summary disposition. This appeal followed.

II. ANALYSIS

A. STANDARD OF REVIEW

The critical issue in this case is whether a carryforward of a credit earned under the SBTA is refundable as a “credit” under MCL 208.1437(18) of the MBTA.

“Where fraud is not claimed, we review the [MTT's] decision for misapplication of the law or adoption of a wrong principle.” Spartan Stores, Inc. v. Grand Rapids, 307 Mich.App. 565, 568, 861 N.W.2d 347 (2014) (citation and quotation marks omitted). When statutory interpretation is involved, as it is in the instant case, our review is de novo. Id. at 569, 861 N.W.2d 347. See also Briggs Tax Serv., LLC v. Detroit Pub. Sch., 485 Mich. 69, 75, 780 N.W.2d 753 (2010).

“The primary goal of statutory interpretation is to give effect to the intent of the Legislature.” Briggs Tax Serv., 485 Mich. at 76, 780 N.W.2d 753. The first step in the analysis is to examine the plain language of the statute at issue. Id. “When construing statutory language, [the court] must read the statute as a whole and in its grammatical context, giving each and every word its plain and ordinary meaning unless otherwise defined.” MidAmerican Energy Co. v. Dep't of Treasury, 308 Mich.App. 362, 370, 863 N.W.2d 387 (2014) (citations and quotation marks omitted; alteration in original). In addition, this Court should avoid a construction that would render any part of the statute surplusage or nugatory. Id. “If the language of the statute is unambiguous, the Legislature must have intended the meaning clearly expressed, and the statute must be enforced as written.” Id. at 369–370, 863 N.W.2d 387.

B. MCL 208.1437(18)

At issue in this case is the interpretation of MCL 208.1437(18), which provides:

Except as otherwise provided under this subsection, if the credit allowed under this section for the tax year and any unused carryforward of the credit allowed under this section exceed the qualified taxpayer's or assignee's tax liability for the tax year, that portion that exceeds the tax liability for the tax year shall not be refunded but may be carried forward to offset tax liability in subsequent tax years for 10 years or until used up, whichever occurs first. Except as otherwise provided in this subsection, the maximum time allowed under the carryforward provisions under this subsection begins with the tax year in which the certificate of completion is issued to the qualified taxpayer. If the qualified taxpayer assigns all or any portion of its credit approved under this section, the maximum time allowed under the carryforward provisions for an assignee begins to run with the tax year in which the assignment is made and the assignee first claims a credit, which shall be the same tax year. The maximum time allowed under the carryforward provisions for an annual credit amount for a credit allowed under subsection (4) begins to run in the tax year for which the annual credit amount is designated on the certificate of completion issued under this section. A credit carryforward available under section 38g of former 1975 PA 228 that is unused at the end of the last tax year may be claimed against the tax imposed under this act for the years the carryforward would have been available under former 1975 PA 228. Beginning on and after April 8, 2008, if the credit allowed under this section for the tax year exceeds the qualified taxpayer's tax liability for the tax year, the qualified taxpayer may elect to have the excess refunded at a rate equal to 85% of that portion of the credit that exceeds the tax liability of the qualified taxpayer for the tax year and forgo the remaining 15% of the credit and any carryforward. [Emphasis added.]

The refund provision at issue appears in the last sentence of MCL 208.1437(18). That sentence provides that in the event “the credit allowed under this section for the tax year exceeds the qualified taxpayer's tax liability for the tax year,” that qualified taxpayer “may elect to have the excess refunded ...” at a rate of 85%, in exchange for forgoing the remaining percentage of the credit and any carryforward. The pertinent inquiry in determining whether a refund can be obtained is whether that which is sought to be refunded—a carryforward of credit that originated under the...