Michigan Tax Tribunal LC No. 16-003017-TT
Before: Ronayne Krause, P.J., and Gleicher and Letica, JJ.
an audit, the Department of Treasury determined that Total
Armored Car Services, Inc. (TACS) had underpaid its taxes in
three tax years. TACS filed a petition in the Michigan Tax
Tribunal (MTT), challenging the department's disallowance
of certain deductions and credits, and later adding a claim
that it should be treated as a lone tax unit rather than as a
collective taxpayer. The MTT summarily dismissed the
petition. We discern no error in the MTT's judgment and
November 2012, the department conducted an audit of
TACS's business tax returns for 2008 through 2011 and
determined that TACS had underpaid by $144, 924 for tax years
2009, 2010 and 2011. Part of this underpayment arose from the
misclassification of items as materials and supplies for
deduction under MCL 208.1113(6)(c) and part was due to
miscalculation of the employee compensation credit provided
in MCL 208.1403(2). TACS challenged the auditor's
conclusions to no avail. It then filed a petition with the
MTT. In addition to the objections raised directly to the
audit, TACS noted before the MTT hearing that it had filed
its taxes as part of a unitary business group (UBG) with
seven sister corporations but that it actually counted as a
single tax entity pursuant to LaBelle Mgmt, Inc v
Michigan Dep't of Treasury, 315 Mich.App. 23; 888
N.W.2d 260 (2016). Accordingly, TACS generally asserted that
its tax liability was no longer accurately calculated.
ultimately granted summary disposition in the
department's favor and ordered TACS to pay its tax
liability with interest. TACS now appeals.
STANDARD OF REVIEW
review de novo the MTT's decision on a motion for summary
disposition. Moshier v Whitewater Twp, 277 Mich.App.
403, 407; 745 N.W.2d 523 (2007). We also review de novo the
MTT's interpretation of statutory provisions.
Id. However, generally, our review is "limited
to determining whether the tribunal erred in applying the law
or adopted a wrong principle." Id. The
MTT's "factual findings are conclusive if supported
by competent, material, and substantial evidence on the whole
record." Klooster v City of Charlevoix, 488
Mich. 289, 295; 795 N.W.2d 578, 583 (2011) (quotation marks
and citation omitted).
MATERIALS AND SUPPLIES DEDUCTION
year 2010, TACS deducted from its gross receipts $12, 712,
186 in materials and supplies and $24, 567, 291 for tax year
2011. According to the audit report, these
deductions included the cost of "repairs and
maintenance, gas and oil, parts, rental equipment, lease
contract, outside courier services, contract labor and
purchased transportation." The department determined
that costs "related to operating leases, contract labor,
purchased transportation, and outside courier services"
were improperly included in this category and adjusted the
deductions for 2010 and 2011 accordingly.
contends that the disallowed items are "materials and
supplies" deductible from gross receipts under MCL
208.1113(6). The Business Tax Act (BTA) imposes a business
income tax and a modified gross receipts tax against
taxpayers with business activity in Michigan. MCL 208.1201;
MCL 208.1203. A business's modified gross receipts tax
base may be reduced by certain credits and deductions. One
deduction is for "purchases from other firms," MCL
208.1113(6), which includes:
(a) Inventory acquired during the tax year, including
freight, shipping, delivery, or engineering charges included
in the original contract price for that inventory.
(b) Assets, including the costs of fabrication and
installation, acquired during the tax year of a type that
are, or under the internal revenue code will become, eligible
for depreciation, amortization, or accelerated ...