No. 132343, 132344, 132345, 132347, 132348, 132349

Click to view briefs in Adobe format:

132343-5 Plaintiff-Appellee's Brief in Opposition to Leave to Appeal>>
132343-5 Plaintiff-Appellee's Supplemental Brief>>

132343-5 Defendant-Appellant's Application for Leave to Appeal>>
132343-5 Defendant-Appellant's Reply Brief>>
132343-5 Defendant-Appellant's Supplemental Brief>>

132343-5 Detroit Auto Dealers Association and the Michigan Automobile Dealers Associations'
Amici Curiae Brief>>

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132347-9 Plaintiff-Appellant's Application for Leave to Appeal>>
132347-9 Plaintiff-Appellant's Reply Brief>>
132347-9 Plaintiff-Appellant's Supplemental Brief>>

132347-9 Defendant-Appellee's Brief in Opposition to Cross-Application for Leave to Appeal>>

Background

The plaintiffs are licensed automobile dealerships that purchase and resell new and used cars. Each new and used automobile is entered into inventory and remains in inventory until it is resold. None of the vehicles are ever titled in any of the plaintiffs’ names. Some vehicles are driven by the plaintiffs’ employees as “demonstrators.” Such vehicles carry dealer plates, and have stickers on their windows listing their features and price. During the period at issue — October 1999 through September 2003 — the Michigan Department of Treasury had a policy that required payment of use tax on vehicles purchased for resale that accumulated above a certain mileage limitation during the selling process, regardless of whether the vehicles were purchased for resale and sold, and without inquiry into whether the mileage was due to test drives by customers or by dealership employees. Each of the plaintiffs paid use tax on the new and used vehicles at issue in this case in accordance with that policy. In late 2003, the Court of Appeals issued its unpublished decision in Crown Motors of Charlevoix, Ltd v Dept of Treasury, (Docket No. 240555). Crown Motors held that a dealership that purchased vehicles for resale and that ultimately sold the vehicles, but meanwhile used the vehicles for “various other purposes” before reselling them, was not liable for use tax pursuant to MCL 205.94(1)(c). After learning of the Court of Appeals ruling in Crown Motors, the plaintiffs requested a refund of use tax they had previously paid on new and used vehicles. The refund requests totaled $48,449.74. The Department of Treasury denied each of the plaintiffs’ requests, refusing to alter its long-standing position on the basis of an unpublished Court of Appeals opinion, which is not binding precedent. The plaintiffs appealed to the Court of Claims, which determined that the plaintiffs were entitled to a refund; the Court of Claims directed the department to refund the full amount requested of $48,449.74. In a published opinion, the Court of Appeals affirmed in part, reversed in part, and remanded the case to the trial court for further proceedings. The appeals court affirmed the trial court’s determination that, because plaintiffs purchased the subject automobiles for resale, they were exempt from use tax pursuant to the “purchased for resale” exemption of MCL 205.94(1)(c). But the Court of Appeals also concluded that, pursuant to the 2002 amendment of MCL 205.93(2), a 2.5 percent use tax and a $30 monthly charge applies to vehicles the plaintiffs used as “demonstrators” beyond the 25-vehicle allowable exemptions under the demonstration exemption, notwithstanding the resale exemption. Both the department and the plaintiffs appeal.

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