Nonresident Presumed Exempt If brought Into Michigan More Than 90 Days After Purchase
In Free Enterprises LLC v. Department of Treasury, Michigan Court of Appeals, No. 306195, November 6, 2012, Michigan use tax was not due on a recreational vehicle (RV) purchased in Florida, registered in Montana, and subsequently used in Michigan because there is a presumption of exemption for property brought into Michigan by a nonresident more than 90 days after its purchase. The owner of record was a Montana-based limited liability company (LLC) whose sole member was a Michigan resident at the time of the RV's purchase.
No sales or use taxes were paid on the RV, as it was titled in Montana, which does not impose such taxes, and Florida defers taxation to the state of registration. The Department of Treasury failed to rebut the presumption of exemption, as there was no evidence that the formation of the LLC and the subsequent RV purchase were undertaken illegally for purposes of tax evasion. Though the transaction may have been structured to minimize the LLC member's tax liability, there was no evidence that the Petitioner failed to pay any legally required taxes or fees in Florida or Montana or engaged in other illegal conduct. As the RV was not brought into Michigan until 389 days after purchase, was stored in Michigan only in the summer months, and the Petitioner's sole member resided in Florida, the Tax Tribunal correctly held that the presumption of exemption was not overcome.