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

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

Blog: www.EdKisscorni.com/Blog1
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 Blog 
Tuesday, October 19 2010

Ford Motor Credit Co. Asked the U.S. Supreme Court to Consider Retroactivity of Bad Debt Change

A motor vehicle financing company, Ford Motor Credit Co., has asked the U.S. Supreme Court whether a retroactive change in a Michigan sales tax refund statute for bad debts satisfies due process when applied to deny refunds for the preceding five-year period.

In Daimler Chrysler Services North America LLC v. Dep't of Treasury, 723 N.W.2d 569 (2006), the Michigan Court of Appeals held that a motor vehicle financing company was a "taxpayer" entitled to refunds of sales tax paid and remitted by dealerships on installment sales when the purchasers subsequently defaulted. In response, the Michigan Legislature retroactively amended the bad debt sales tax statute to overturn the effect of the decision in DaimlerChrysler.

The taxpayer in the current case filed a refund action asserting that the amendments violated the Due Process Clause of the U.S. Constitution because they imposed an indefinite period of retroactivity and were applied to a five-year period in the taxpayer's case. However, the Court of Appeals affirmed the dismissal of the taxpayer's action for the reasons stated in the contemporaneously argued case of GMAC, LLC v. Dep't of Treasury, 781 N.W.2d 310 (Mich. Ct. of App. 2009).  In GMAC, the court held that a seven-year retroactive application of the amendments did not violate due process or the requirement that such legislation be limited to a modest period of retroactivity.  The Michigan Supreme Court denied review.

 

Posted by: Ed Kisscorni AT 10:21 am   |  Permalink   |  0 Comments  |  Email
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