Shulevitz v. Michigan Dept. of Treasury, Revenue Division

• Decision Date: 21 September 1977
• Docket Number: Docket No. 31497
• Citation: 78 Mich.App. 655,261 N.W.2d 31
• Parties: Melvin B. and Bernice K. SHULEVITZ, Plaintiffs-Appellants, v. MICHIGAN DEPARTMENT OF TREASURY, REVENUE DIVISION, Defendant-Appellee.
• Court: Court of Appeal of Michigan — District of US

Page 31

261 N.W.2d 31

78 Mich.App. 655

Melvin B. and Bernice K. SHULEVITZ, Plaintiffs-Appellants, v. MICHIGAN DEPARTMENT OF TREASURY, REVENUE DIVISION, Defendant-Appellee.

Docket No. 31497.

Court of Appeals of Michigan.

Sept. 21, 1977.

Released for Publication Jan. 12, 1978.

Cooper, Baskin & Feldstein by Daniel S. Cooper, Birmingham, for plaintiffs-appellants.

Frank J. Kelley, Atty. Gen., Robert A. Derengoski, Sol. Gen., John W. Jackson, Jr., Asst. Atty. Gen., for defendant-appellee.

Before J. H. GILLIS, P. J., and BRONSON and ROBINSON, ^* JJ.

PER CURIAM.

The facts in this case are not in dispute. Plaintiffs filed amended Michigan income tax returns for calendar years 1968 and 1969 which showed a tax credit for income taxes paid by plaintiffs to the Commonwealth of Puerto Rico. The Revenue Division of the Department of Treasury (hereinafter referred to as Department of Treasury) audited these returns and disallowed the claimed tax credit. The Department of Treasury then assessed plaintiffs a tax deficiency of $873.89, the amount of the claimed credit.

Plaintiffs appealed the assessment to the State Board of Tax Appeals (hereinafter referred to as the Board). The Board held that the claimed tax credit is not authorized by the Michigan Income Tax Act of 1967 M.C.L.A. § 206.255; M.S.A. § 7.557(1255), and issued an order directing plaintiffs to pay the assessed deficiency.

Plaintiffs paid the deficiency and filed a complaint in the Michigan Court of Claims seeking the return of those taxes paid. The Court of Claims adopted the Board's decision and entered an order accordingly. Plaintiffs appeal as of right to this Court from the decision of the Court of Claims.

Plaintiffs contend that pursuant to § 255 of the Michigan Income Tax Act of 1967 they should receive an income tax credit on their Michigan income tax for income taxes which they paid to the Commonwealth of Puerto Rico. Section 255 provides that:

"(1) A resident individual or resident estate or trust shall be allowed a credit against the tax otherwise due under this act for the amount of any income tax imposed on him for the taxable year by another state of the United States or a political subdivision thereof or the District of Columbia on income derived from sources without this state which is also subject to tax under this act." M.C.L.A. § 206.255; M.S.A. § 7.557(1255).

On its face, § 255 makes no mention of the Commonwealth of Puerto Rico, and therefore it is difficult to see how this section could apply to income taxes paid to Puerto Rico.

However, plaintiffs direct us to the general definition section of the act, and more specifically to M.C.L.A. § 206.20; M.S.A. § 7.557(120), which reads in part:

" 'State' means any state of the United States, the District of Columbia, the Commonwealth of Puerto Rico, any territory or possession of the United States, and any foreign country, or political subdivision, thereof."

Plaintiffs contend that this definition should be read into the word "state" when interpreting § 255, and, therefore, a tax credit should be allowed for income taxes paid to Puerto Rico. We disagree.

The § 20 definition of "state," if used in § 255, would render the language of § 255 redundant. This Court believes that the language "state of the United States" was used in § 255 to expressly avoid the expansive definition of "state" as set forth in § 20.

The wording of § 255 seems clear, and in such a case the judiciary may not disturb the obvious intention of the Legislature. Dussia v. Monroe County Employees Retirement System, 386 Mich. 244, 249, 191 N.W.2d 307 (1971); Schigur v. Secretary of State, 73 Mich.App. 239, 251 N.W.2d 567 (1977).

Assuming that the statute is unclear, it is the Court's function to interpret it. The recent case of King v. Director of Midland County Department of Social Services, 73 Mich.App. 253, 251 N.W.2d 270 (1977), summarizes some of the rules to be followed in interpreting an ambiguous statute:

"The primary rule of statutory construction is to determine and effectuate the Legislature's intent. Williams v. Secretary of State, 338 Mich. 202, 60 N.W.2d 910 (1953); Chesapeake & Ohio R. Co. v. Public Service Commission, 59 Mich.App. 88, 228 N.W.2d 843 (1975). Toward that end, statutory language should be given a reasonable construction considering the purpose of the statute and the object sought to be accomplished. Schoolcraft County Board of Commissioners v. Schoolcraft Memorial Hospital Board of Trustees, 68 Mich.App. 654, 243 N.W.2d 708 (1976); Royal Oak School Dist. v. Schulman, (68 Mich.App. 589, 243 N.W.2d 673 (1976)). An act must be read in its entirety and the meaning given to one section arrived at after due consideration of other sections so as to produce, if possible, a harmonious and consistent enactment as a whole. Williams v. Secretary of State, supra; Scholten v. Rhoades, 67 Mich.App. 736, 242 N.W.2d 509 (1976). Statutes are to be construed so as to avoid absurd consequences. Williams v. Secretary of State, supra; State Farm Mutual Automobile Insurance Co. v. Kurylowicz, 67 Mich.App. 568, 242 N.W.2d 530 (1976)." 73 Mich.App. at 258, 259, 251 N.W.2d at 273.

In order to ascertain the intention of the Legislature, we must examine the purpose of the statute.

An income tax credit is allowed for Michigan residents who earn income in another state. The purpose of such a credit is to avoid triple taxation of income. Without such a credit, the Michigan resident would...