Temporary Bolt Did Not Constitute an Affixation to Realty
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 kiosks 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.