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Vulic v. Department of Treasury

Court of Appeals of Michigan

September 26, 2017

DAVOR VULIC, Petitioner-Appellant,
v.
DEPARTMENT OF TREASURY, Respondent-Appellee.

         Tax Tribunal LC No. 15-004644-TT

          Before: Markey, P.J., and Ronayne Krause and Boonstra, JJ.

          BOONSTRA, P.J.

         Petitioner appeals by right the Michigan Tax Tribunal's ("the Tribunal") grant of summary disposition in favor of respondent. Because we hold that summary disposition was properly granted, but do so primarily for different reasons than those cited by the Tribunal, we affirm in part the Tribunal's final opinion and judgment, vacate in part, and remand for the entry of an order granting summary disposition in favor of respondent for the reasons stated in this opinion.

         I. PERTINENT FACTS AND PROCEDURAL HISTORY

         Petitioner purchased 1, 799 cartons (each carton containing 10 packs) of cigarettes from an out-of-state business and shipped them to a friend in Bosnia-Herzegovena. The cigarettes were purchased with funds from an account in petitioner's name. The friend reimbursed petitioner (or paid him in advance) for his costs in obtaining and shipping the cigarettes, and petitioner made no profit from the endeavor. His friend asserted via letter that all relevant taxes and duties in Bosnia-Herzegovena were appropriately paid. The cigarettes were eventually sold at petitioner's friend's store. No taxes were paid for the cigarettes in Michigan, and neither petitioner nor the out-of-state business was licensed to sell or receive cigarettes in Michigan. Respondent assessed tax upon petitioner under the Tobacco Products Tax Act (TPTA), MCL 205.421 et seq. Petitioner contested the tax, asserting that he should not be liable for taxes on the cigarettes because he was not a "consumer" of the cigarettes, noting that the cigarettes were located in Michigan for less than 24 hours, the cigarette cartons were never opened in Michigan, the cigarettes were never smoked in Michigan, and all relevant taxes were paid at their final destination. The Tribunal disagreed. This appeal followed. We note that the only issue before us is whether petitioner is personally liable for taxes under the TPTA, not whether petitioner's actions were otherwise lawful.

         II. STANDARD OF REVIEW

         We review the Tribunal's grant of summary disposition de novo. Paris Meadows LLC v City of Kentwood, 287 Mich.App. 136, 141; 783 N.W.2d 133 (2010). We generally give deference to an administrative agency's interpretation of a statute it is delegated to administer, but we are not bound to such an interpretation. Bechtel Power Corp v Dep't of Treasury, 128 Mich.App. 324, 329; 340 N.W.2d 297 (1983). Notwithstanding any deference that might be afforded to the Tribunal, we review de novo the interpretation and application of statutory language. Paris Meadows, 287 Mich.App. at 141-142. Plain and unambiguous language in a statute must be enforced as written, and a forced construction or implication will not be upheld. Sebastian J. Mancuso Family Trust v City of Charlevoix, 300 Mich.App. 1, 4-5; 831 N.W.2d 907 (2013).

         III. ANALYSIS

         The TPTA "can aptly be described as a pervasive group of tobacco product regulations." Value, Inc v Dep't of Treasury, ___ Mich.App. ___, ___; ___ N.W.2d (2017), slip op at 2, quoting People v Beydoun, 283 Mich.App. 314, 328; 770 N.W.2d 54 (2003). It "contains detailed definitions, licensing and stamping requirements, recordkeeping and document maintenance obligations, schedules of tax rates, civil and criminal penalties for violations of the TPTA, procedures governing seized property, and a delineation of tobacco tax disbursements for various purposes." Id. "[T]he TPTA 'is at its heart a revenue statute, designed to assure that tobacco taxes levied in support of Michigan schools are not evaded.' " Id. (citations omitted).

         Petitioner argues that he is not subject to tax under the TPTA because he was not a "consumer" of the tobacco products at issue. We disagree.

         The TPTA provides in part that "a person shall not purchase, possess, acquire for resale, or sell a tobacco product as a manufacturer, wholesaler, secondary wholesaler, vending machine operator, unclassified acquirer, transportation company or transporter in this state unless licensed to do so." MCL 205.423(1). Under the statutory definitions, petitioner was either a "transporter"[1] or an "unclassified acquirer"[2] of the cigarettes at issue. Yet it is undisputed that petitioner was not licensed under the TPTA. Petitioner therefore was not entitled under the TPTA to "purchase, possess, acquire for resale, or sell" cigarettes. Id.

         The TPTA further provides for a tax to be levied on the sale of tobacco products. MCL 205.427(1). Licensees are required to file a monthly return reporting specified information, MCL 205.427(2), and to "pay . . . the tax levied in subsection (1) for tobacco products sold during the calendar month covered by the return, less [specified] compensation, " MCL 205.427(3). In addition, MCL 205.428(1) provides:

A person, other than a licensee, who is in control or in possession of a tobacco product contrary to this act, who after August 31, 1998 is in control or in possession of an individual package of cigarettes without a stamp in violation of this act, or who offers to sell or does sell a tobacco product to another for purposes of resale without being licensed to do so under this act, shall be personally ...

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