Holy Spirit Ass'n for Unification of World Christianity v. Department of Treasury

• Decision Date: 16 March 1984
• Docket Number: Docket No. 66387
• Citation: 131 Mich.App. 743,347 N.W.2d 707
• Parties: HOLY SPIRIT ASSOCIATION FOR the UNIFICATION OF WORLD CHRISTIANITY, Petitioner-Appellant, v. DEPARTMENT OF TREASURY, Respondent-Appellee.
• Court: Court of Appeal of Michigan — District of US

Page 707

347 N.W.2d 707

131 Mich.App. 743

HOLY SPIRIT ASSOCIATION FOR the UNIFICATION OF WORLD CHRISTIANITY, Petitioner-Appellant, v. DEPARTMENT OF TREASURY, Respondent-Appellee.

Docket No. 66387.

Court of Appeals of Michigan.

Submitted Aug. 3, 1983.

Decided Feb. 6, 1984.

Released for Publication March 16, 1984.

Gromek, Bendure & Thomas by James G. Gross, Detroit, and Melrod, Redman & Gartlan, P.C., Washington, D.C. by Neil I. Levy, Washington, D.C., of counsel, for petitioner-appellant.

Frank J. Kelley, Atty. Gen., Louis J. Caruso, Sol. Gen. and Richard R. Roesch and Thomas J. Kenny, Asst. Attys. Gen., for respondent-appellee.

Before HOOD, P.J., CYNAR and MARUTIAK, ^* JJ.

CYNAR, Judge.

Petitioner appeals as of right from a decision of the State Board of Tax Appeals, issued August 2, 1982, affirming a retail sales tax assessment against petitioner in the amount of $14,175.85.

The Holy Spirit Association for the Unification of World Christianity (Unification Church or petitioner) was founded by the Reverend Sun Myung Moon in Korea in 1954. The Unification Church is presently active in more than 100 nations, including the United States. It was incorporated in California in 1961 and is registered in Michigan as an out-of-state corporation.

There is a heavy emphasis in the Unification Church upon public proselytizing and solicitation of funds to support church activities. The fund-raising endeavors of the membership in Michigan irked certain local officials and ultimately piqued the interest of the respondent, Department of Treasury, which believed that church members might be engaged in retail sales.

On January 9, 1979, and again on June 8, 1979, respondent notified petitioner by mail that respondent had been apprised of retail sales activities by church members, and requested that petitioner complete and return a sales tax license application. No response was received to either letter. On August 2, 1979, respondent issued a notice of intent to assess against petitioner sales tax covering the period of July 1, 1975, through June 30, 1979. The assessment proposed was $10,000 in retail sales tax plus penalty and interest, a total of $14,175.85. Once again, no response was forthcoming from petitioner.

Three weeks later respondent issued a notice of final assessment; the assessment amount was not changed. On September 19, 1979, petitioner filed a notice of appeal to the State Board of Tax Appeals (SBTA), claiming that it had not engaged in sales at retail during the relevant period. ¹

Following an evidentiary hearing, the SBTA affirmed the assessment in a brief written opinion:

"Appellant is a California non-profit corporation with its principal office at 4 West 43rd Street, New York, New York 10036. During the period July 1, 1975, through June 30, 1979, members of appellant solicited funds and distributed personal tangible property such as flowers and candy.

"Appellee issued the sales tax assessment on the belief that the members were selling the personal property in question. Appellant contends that the members were not selling the items but were making gifts of the items, and at the same time were soliciting funds as contributions. The sole issue is whether the subject items were 'sold' or 'given away'. Testimony was received by witnesses for both parties, appellant's witness indicating that the personal property items in question were given away and not sold, and the witness for appellee, a former member of appellant, testifying that the articles in question were definitely sold and not given away.

"After careful review of the testimony presented at the hearing, it is the belief of the board that the burden of proof rests upon the appellant, and he [sic ] has failed to overcome it."

Petitioner vigorously maintains that imposition of a sales tax upon the activities of its membership would affect an unconstitutional tax upon its right of free exercise of religion, see Kollasch v. Adamany, 99 Wis.2d 533, 299 N.W.2d 891 (1980), rev'd 104 Wis.2d 552, 313 N.W.2d 47 (1981); State v. Van Daalan, 69 S.D. 466, 11 N.W.2d 523 (1943), or, in the alternative, that it would involve an impermissible entanglement with religious affairs, Pletz v. Secretary of State, 125 Mich.App. 335, 373-374, 336 N.W.2d 789 (1983); First Lutheran Mission of the Knolls v. Dep't. of Revenue, 44 Colo.App. 417, 613 P.2d 351 (1980); Tribe, American Constitutional Law, Sec. 14-12, pp. 865-880 (1978). We do not reach these issues, however, since we find that the decision of the SBTA was not supported by competent, material and substantial evidence on the whole record. Const. 1963, art. 6, Sec. 28.

As a preliminary matter, we consider petitioner's argument that the SBTA misallocated the burden of proof. It is apparent from the board's opinion that it laid upon petitioner not only the burden of refuting the assessment amount, but also the burden of demonstrating that it had not engaged in sales at retail. Section 17 of the General Sales Tax Act, M.C.L. Sec. 205.51 et seq.; M.S.A. Sec. 7.521 et seq., empowers the revenue division of the Department of Treasury to make a deficiency assessment. This section provides, so far as is relevant, as follows:

"Every person liable for any tax imposed under this act shall keep an accurate and complete beginning and annual inventory and purchase records of additions to inventory, complete daily sales records, receipts, invoices, bills of lading and any and all pertinent documents in such form as the department may require and wherever an exemption from sales tax is claimed by reason of the sale being for resale or for any of the other exemptions or deductions granted under this act, there shall be a record kept of the name and address of the person to whom the sale is made, the date of the sale, the article purchased, the use to be made of the article, the amount of the sale and if that person has a sales tax license, that number shall also be noted thereon.

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* * *

"In the event the taxpayer fails to file a return or to maintain or preserve proper records as prescribed in this section or the department has reason to believe that any records maintained or returns filed are inaccurate or incomplete and that additional taxes are due, the department shall be empowered to assess, upon such information as is available or may come into possession of the department, the amount of the tax due from the taxpayer. Such assessment after notice and hearing as hereinafter provided shall be deemed to be prima facie correct for the purpose of this act and the burden of proof of refuting such assessment shall be upon the taxpayer." (Emphasis added.) MCL 205.67; MSA 7.538.

The General Sales Tax Act also provided a mechanism for parties desiring to contest the assessment. M.C.L. Sec. 205.72; M.S.A. Sec. 7.543, operative at the time of proceedings below, provided that upon receiving notice of intent to levy the deficiency the taxpayer could "demand a hearing on the question of the levy of such deficiency". If a hearing was demanded, the contestant was entitled to reasonable notice and other procedural safeguards:

"The taxpayer shall be entitled to appear before the department and be represented by counsel and present testimony and argument. After the hearing the department shall render its decision in writing and, by order, levy any deficiency found by it to be due and payable.

"If any taxpayer is aggrieved by any decision of the department, he may appeal under the provisions of Act No. 122 of the Public Acts of 1941, as amended * * *." M.C.L. Sec. 205.72; M.S.A. Sec. 7.543. Repealed by 1980 P.A. 164, imd. eff. June 18, 1980.

1941 P.A. 122 was the act establishing the Department of Revenue and provided for appeals to the SBTA. Section 7 of that act, governing appeals procedure, provided in relevant part:

"The state board of tax appeals, following the filing of such answer, shall have jurisdiction to review such assessment, decision or order and both the appellant and the department shall have the right to swear witnesses and to be represented by counsel before said state board of tax appeals. Said hearing shall be heard within 60 days after filing of said answer, as in a court not of record and the legal rules of evidence prevailing in the circuit courts of this state shall be enforced. The burden of proof in any appeal from any assessment, decision or order shall rest with the appellant." (Emphasis added.) M.C.L. Sec. 205.7; M.S.A. Sec. 7.657(7).

We initially note that petitioner may not now contest the allocation of the burden of proof concerning the accuracy of the deficiency assessment. In objecting to examination concerning the existence of fund-raising books or records maintained by the church, petitioner's counsel stated: "[W]e are not contesting the amount of the deficiency but solely the question of whether or not the Church has engaged in any sale activity within the State of Michigan". The question remains whether petitioner had the burden of proving that it was not making taxable sales. We believe that it did.

Section 7 of the revenue department statute, supra, is the controlling provision, and it clearly places the burden of proof upon the appellant. A statute unambiguous on its face is to be enforced as written, and courts will avoid further interpretation or construction of its terms. Detroit v. Redford Twp., 253 Mich. 453, 235 N.W. 217 (1931); Espinoza v. Bowerman-Halifax Funeral Home, 121 Mich.App. 432, 436, 328 N.W.2d 657 (1982), lv. den. 417 Mich. 1017 (1983).

We concur with petitioner that Sec. 17 of the General Sales Tax Act, governing deficiency assessments, shifts the burden of proof after notice and hearing only as to the amount of the assessment. By its terms the section would apply to petitioner if it had any sales tax liability, a matter dependent upon proofs apart from those pertinent to the assessment amount. See Arbor Sales, Inc. v. Dep't. of Treasury, 104 Mich.App....