Ryan Announces that Michigan Legislature Moves to Deny Taxpayer Rights to Refunds

DALLAS, Sept. 10, 2014 /PRNewswire/ -- The Michigan Legislature has passed legislation aimed at extinguishing millions of dollars of pending refund claims under the state's business tax. The Michigan House of Representatives added the retroactive tax law change to Senate Bill 156 ("SB 156"), which it passed on September 9, 2014. On September 10, 2014, the Senate also passed the bill, and sent it to Governor Rick Snyder, who has said he will sign it.

SB 156 seeks to repeal—retroactive to January 1, 2008—a Michigan law that permits taxpayers to elect to apportion their Michigan Business Tax using a three-factor apportionment formula contained in the Multistate Tax Compact (MTC). The Michigan Department of Treasury ("Department") has maintained that the three-factor formula option was repealed by implication effective January 1, 2008, when the state adopted the Michigan Business Tax Act. This act required taxpayers to apportion using a single sales factor formula. The Court of Appeals agreed with the Department, but on July 14, 2014, the Michigan Supreme Court disagreed, upholding the taxpayer's right to the three-factor apportionment option in International Business Machines (IBM) Corp. v. Dep't of Treasury. The Department filed a motion for rehearing, which is still pending before the Court.

If signed into law, SB 156 will effectively overturn the IBM decision and deny all MTC election refund claims for tax years 2008 through 2010. This legislation is extremely detrimental for multistate taxpayers and will set a dangerous precedent for other states to follow suit.

About Ryan
Ryan is an award-winning global tax services firm, with the largest indirect and property tax practices in North America and the sixth largest corporate tax practice in the United States. Headquartered in Dallas, Texas, the Firm provides a comprehensive range of state, local, federal, and international tax advisory and consulting services on a multi-jurisdictional basis, including audit defense, tax recovery, credits and incentives, tax process improvement and automation, tax appeals, tax compliance, and strategic planning. Ryan is a three-time recipient of the International Service Excellence Award from the Customer Service Institute of America (CSIA) for its commitment to world-class client service. Empowered by the dynamic myRyan work environment, which is widely recognized as the most innovative in the tax services industry, Ryan's multi-disciplinary team of more than 1,800 professionals and associates serves over 9,000 clients in more than 40 countries, including many of the world's most prominent Global 5000 companies. More information about Ryan can be found at www.ryan.com.

TECHNICAL INFORMATION CONTACT:

Michael Martens
Principal
Ryan
857.362.7522
[email protected]

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SOURCE Ryan, LLC

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