Articles Posted in Michigan

Taxation Without Representation: Michigan Supreme Court Says Neither State Law Nor the U.S. Constitution Requires Inclusion of Receipts From Deemed Asset Sale in Sales Factor

Posted August 21, 2023

by Breanna N. Zagorski and Zachary T. Atkins

Breanna N. Zagorski

Zachary T. Atkins

In a split decision, the Michigan Supreme Court rejected a taxpayer’s assertion that applying the standard apportionment formula to gain derived from a deemed asset sale led to a grossly distorted, unconstitutional result. The court held in Vectren Infrastructu Capture-300x300 re Services Corporation v. Department of Treasury, No. 163742 (July 31, 2023), that applying the standard single sales factor apportionment formula—which did not include any receipts from the deemed asset sale—to apportion the gain did not violate the U.S. Constitution’s Due Process Clause or Commerce Clause.

Michigan Alternative Apportionment Formula Victory for Taxpayer

Posted March 16, 2020

by Jeffrey M. Vesely

Jeffrey M. Vesely

iStock-119662314-michigan-300x222 A very interesting and heartening decision was just handed down by the Michigan Court of Appeals in Vectren Infrastructure Services Corp. v. Department of Treasury in connection with a sale of an out-of-state business. Copy attached. In Vectren, the Court of Appeals held that the Department of Treasury’s (DOT) removal of the gain from the sale of the business from the denominator of the sales factor, while including the gain in the income base, violated the Due Process and Commerce Clauses. Notably, during the year in question, Michigan used a single sales factor apportionment formula. The decision underscores the potential unfair apportionment inherent in a single sales factor apportionment formula.