Introduction: Michigan Tax Procedural Rules
Michigan taxes, including the Michigan Business Tax, sales tax, use tax, and income tax, generally must be assessed pursuant to procedures set forth in the Michigan Revenue Act. These statutory procedures establish specific deadlines for filing both administrative appeals and appeals to either the Michigan Tax Tribunal or the Michigan Court of Claims. Understanding Michigan Revenue Act deadlines is critical in dealing with Michigan tax matters.
Beech Air: Failure to Meet Deadline Proves Fatal
In Beech Air, Inc. v Dep't of Treasury, the taxpayer was dealing with a use tax assessment related to an aircraft. The taxpayer had a substantive claim that its activities, with respect to the temporary presence of the aircraft in Michigan, were exempt from Michigan use tax. The taxpayer engaged in communications with Department personnel during 2008 in attempts to provide documentation necessary to establish its claim of exemption.
Notwithstanding these ongoing communications, on August 15, 2008, the Department issued its Bill for Taxes Due (Final Assessment) to the taxpayer. The taxpayer continued communicating with the Department and, on or about August 27, 2008, had a specific communication with Department personnel in which the taxpayer was advised orally that it could respond to the Department's Final Assessment by writing to the Department regarding the denial of the claimed exemption.
After its informal communications proved unsuccessful, on September 29, 2008, the taxpayer filed a Petition in the Michigan Tax Tribunal to contest the Final Assessment and formally claim exemption from use tax. Because the Petition was filed more than 35 days after the date of the Final Assessment, the claim was held barred. The Department's oral advise was held to have no impact on the deadlines for appeal set forth in the statute.
Practical Implication of Beech Air: Meeting Deadlines is Jurisdictional Prerequisite that is unaffected by Oral Advise
Beech Air reaffirms the importance of carefully reviewing any type of notice from the Michigan Department of Treasury - or any other Michigan tax-related agency. Taxpayers should be aware that virtually any appeal of a tax assessment must be made in compliance with statutory deadlines. The type of notice often creates specific appeal rights and deadlines, and should be evaluated carefully to protect appeal rights. Important types of Michigan notices include, but are not limited to, the following:
The above summary highlights two of the types of notices that are used by the Department. There may be many other types of notices or communications from the Department, and each of these communications can create deadlines to respond that should be carefully evaluated. As shown in Beech Air, failure to comply with a deadline can result in a total loss of appeal rights.