Davis v. Department of Treasury
Decision Date | 17 May 1983 |
Docket Number | Docket No. 62236 |
Citation | 124 Mich.App. 222,333 N.W.2d 521 |
Parties | Paul S. DAVIS, Petitioner-Appellant, v. DEPARTMENT OF TREASURY, Respondent-Appellee. 124 Mich.App. 222, 333 N.W.2d 521 |
Court | Court of Appeal of Michigan — District of US |
[124 MICHAPP 224] Paul S. Davis, East Lansing, for petitioner-appellant.
Frank J. Kelley, Atty. Gen., Louis J. Caruso, Sol. Gen., and Richard R. Roesch and Curtis G. Beck, Asst. Attys. Gen., for respondent-appellee.
Before HOLBROOK, P.J., and J.H. GILLIS and DODGE, * JJ.
Petitioner appeals as of right from a January 11, 1982, judgment of the Michigan Tax Tribunal affirming the denial of petitioner's claim for an intangibles tax refund.
Petitioner timely paid his intangibles taxes for the years 1976, 1977 and 1978. In November, 1979, the Michigan Department of Treasury issued a notice of intent to assess an additional intangibles tax of $118.40 for the years 1976 and 1978. Petitioner paid the tax under protest and requested a hearing. A hearing was held before a Department of Treasury hearing officer who, by decision and order dated November 21, 1980, denied petitioner's claim for an intangibles tax refund.
Petitioner then petitioned the Tax Tribunal for review of the department's denial of his refund [124 MICHAPP 225] claim, alleging that the intangibles tax act, M.C.L. Sec. 205.131 et seq.; M.S.A. Sec. 7.556(1) et seq., was unconstitutional in several respects or, in the alternative, that the November, 1979, assessment was improper.
On December 10, 1981, the Tax Tribunal's hearing officer issued a proposed judgment recommending affirmance of the department's denial of the refund claim. Petitioner filed exceptions and, on January 11, 1982, the tribunal adopted the findings of fact and conclusions of law of the proposed judgment. Petitioner appeals as of right.
Petitioner first argues that the intangibles tax act taken in conjunction with the Income Tax Act of 1967, M.C.L. Sec. 206.1 et seq.; M.S.A. Sec. 7.557(101) et seq., results in a graduated income tax in violation of Const.1963, art. 9, Sec. 7. The argument lacks merit. The intangibles tax is a specific tax on the privilege of ownership of intangible personal property. The fact that income is used as a partial basis for measuring the intangibles tax does not make it an income tax. Shivel v. Kent County Treasurer, 295 Mich. 10, 19, 294 N.W. 78 (1940). See also Shapero v. Dep't of Revenue, 322 Mich. 124, 33 N.W.2d 729 (1948). Since the intangibles tax does not constitute an income tax, there is no violation of Const.1963, art. 9, Sec. 7.
With regard to petitioner's second argument, we adopt the following analysis of the Tax Tribunal hearing officer:
"Petitioner next argues that since the new Constitution removed intangible property from the general property tax, removed the reference to 'specific' taxes, and the reference to a nongraduated income tax, it 'is clear that the intent of the new Constitution was to replace the intangible property tax with an income tax'. * * *
[124 MICHAPP 226] "Petitioner is correct that the reference in Section 4 of the 1908 Constitution has not been reinserted in the new Constitution ('The legislature may by law impose specific taxes, which shall be uniform upon the classes upon which they operate') and that the new Constitution provides for 'the uniform general ad valorem taxation of real and tangible personal property not exempt by law'. Thus, the new Constitution specifically speaks only of tangible property.
Petitioner's contention that the Income Tax Act [124 MICHAPP 227] and the intangibles tax act result in double taxation and violate Sec. 3(b)(13) of the intangibles tax act is rejected. The intangibles tax is a specific tax against the ownership of intangible property whereas the income tax is an assessment upon the income of a person and not upon any particular property from which that income is derived. Thus, the double taxation issue need not be addressed. See Shivel, supra, 295 Mich. p. 19, 294 N.W. 78; Stockler v. Dep't of Treasury, 75 Mich.App. 640, 652, 255 N.W.2d 718 (1977), lv. den. 402 Mich. 802 (1977).
Petitioner next asserts that M.C.L. Sec. 205.133(b)(12); M.S.A. Sec. 7.556(3)(b)(12), which provides an exemption from the intangibles tax for property used in a business activity if the income from such property is considered in computing the single business tax, violates the uniformity requirement and the equal protection clause, rendering the intangibles tax act invalid.
The exemption provides:
"(b) The following shall be exempt from the tax imposed by this act:
* * * "(12) Intangible personal property owned by or comprising the assets of a person or business enterprise engaged in business activity as defined by section 3 of Act No. 228 of the Public Acts of 1975, as amended, being section 208.3 of the Michigan Compiled Laws, if, were income received from such intangible personal property, it would be considered even...
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