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Contact Information:
Edward S. Kisscorni, CPA
290 Suncrest Court, SW
Grandville, MI 49418

Office: 616/233-0667
Cell: 616/443-6730
Fax: 616/233-0667




Wednesday, July 13 2011

Taxpayer Was Not a Contractor Because They Did Not Install The ATM Kiosks

In Dallman Industrial Corporation v. Michigan Department of Treasury, Michigan Tax Tribunal, No. 311862, June 6, 2011, a manufacturer of ATM kiosks was not liable for use tax on sales made to customers in Michigan because it did not provide installation of the kiosks and, therefore, did not serve as a contractor.  The taxpayer collected sales tax on its retail transactions, except for those sales in which the purchaser claimed an exemption or held a direct pay permit.  In those instances where the taxpayer delivered the kiosk to its customer, its activities consisted of unloading and unpacking the kiosk, placing it in position, and securing it with a temporary bolt.  The ATM owner subsequently hired other service providers to permanently affix the ATM and to install security.

The Department of Treasury's challenge to the taxpayer's claim of exemption for its sales to banks and credit unions claiming to be governmental instrumentalities was dismissed based on its failure to exhaust administrative remedies, as it failed to provide the taxpayer with the required notice that the claim of exemption was improper, an opportunity for an informal conference to discuss the issue, and a written decision regarding the department's position.

The penalty for the taxpayer's unpaid sales tax for the 1995-1996 period was upheld because the taxpayer failed to show reasonable cause that would justify waiver of the penalty.  No documentary evidence was submitted to substantiate the claim that a fire destroyed the taxpayer's financial records or that its former chief financial officer claimed that he filed the required returns.


Posted by: Ed Kisscorni AT 01:00 pm   |  Permalink   |  0 Comments  |  Email
Tuesday, July 12 2011

Purchase and Simultaneous Lease of Aircraft Not a Taxable Use When Aircraft Not Used or Stored in Michigan

In NACG Leasing v. Michigan Department of Treasury, Michigan Tax Tribunal, No. 338928, June 10, 2011the purchaser of an aircraft that was simultaneously leased to the purchaser's corporate affiliate was not liable for Michigan use tax because it never took physical possession of the aircraft and did not use or store it within the state.

At the time of the taxpayer's purchase of the aircraft, the lessee was already in possession of the aircraft, given to it by the previous owner under the terms of the letter of intent.  In addition to lacking physical possession of the aircraft, the taxpayer did not at any time take responsibility for repair and maintenance, insurance, the benefit of warranties, or options for use of the aircraft.

Posted by: Ed Kisscorni AT 01:00 pm   |  Permalink   |  0 Comments  |  Email
Wednesday, July 06 2011

Corporation That Offered Meditation and Healing Skills Not Entitled to Exemption

In Self Realization Meditation Healing Centre v. Charter Township of Bath, Michigan Court of Appeals, No. 297475, June 21, 2011, the property of a nonprofit corporation that was a part of a network of centers that offered training for those wishing to take healing and counselling skills into their lives or professions was not entitled to a local Michigan charitable institution property tax exemption because the overall nature of the corporation was not charitable.

Although charity was one of several stated purposes for which the corporation was incorporated, it was but one of a group of purposes distinguishable from one another.  The other purposes were religious, scientific, literary, and educational.  However, there was insufficient evidence that religion, charity, and education were the chief components of the corporation's purposes because the corporation was organized for the all-encompassing purpose to help people with life in general.  Specifically, the corporation was organized for the stated purpose to assist those who sought inner knowledge and personal growth in the pursuit of peace, health, and happiness through meditation, yoga, and spiritual living.

The court noted that if the corporation's stated purposes constituted charity, this would expand the definition of charity nearly beyond all bounds, in such a way that helping people with almost any mental activity would qualify for charity.  There was no indication that the Legislature intended to expand the charitable exemption quite so broadly as the corporation proposed.  Overall, the corporation was just as much a bed and breakfast, a yoga center, a place to walk in the woods, and a center for learning meditation as it was a charity.

The corporation was also denied a religious exemption because its articles of incorporation did not confirm that its overall nature was religious.  The court concluded that the corporation's principles and teaching were as much philosophy as religion.  Although the corporation did engage in teaching of some beliefs, it was at least equally engaged in teaching practices such as yoga and meditation.

Posted by: Ed Kisscorni AT 12:57 pm   |  Permalink   |  0 Comments  |  Email
Tuesday, July 05 2011

Definition of "Materialperson" Amended to Include Precast Concrete Products

Public Act 71 of 2011 (PA 2011-71), effective June 28, 2011 amends the General Sales Tax Act.  For purposes of the filing of Michigan sales and use tax returns, the definition of "materialperson" has been revised to include those who are primarily engaged in the sale of precast concrete products or conduit or fitting products used in the collection, conveyance, or distribution of water or sewage.  A materialperson may include the amount of taxable sales from materials furnished on a credit sale basis for the purpose of making an improvement to real property in the first quarterly return due following the date of the credit sale.

The General Sales Tax Act typically requires taxpayers to file a sales tax return and remit the amount due each month, based on the amount of all sales and gross proceeds of the taxpayer's business for the preceding month. Taxpayers who remitted $720,000 or more in the previous year are subject to an accelerated payment schedule, which requires two monthly payments. Enacted in 1998, this schedule eased the accelerated payment requirement that had been in place in since 1993.  Later in 1998, an additional change was made to allow a materialperson to file quarterly returns for sales made on a credit basis, since payments for credit sales are usually received several months after the sales take place.

Under the definition of "materialperson", only a person who sells lumber and building material-related products is eligible for quarterly filing.  Evidently, at least one business involved in the sale of precast concrete products filed quarterly sales tax returns until 2004, when the Department of Treasury determined that the taxpayer did not qualify as a materialperson because it did not sell lumber.  Since businesses that sell precast concrete products also make most of their sales on a credit basis, they can experience cash-flow problems due to the monthly and accelerated filing requirements.  Therefore, the legislature determined that a precast concrete product dealer also should be considered a materialperson.

Posted by: Ed Kisscorni AT 10:56 am   |  Permalink   |  0 Comments  |  Email


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