Michigan Supreme Court Holds Both Taxpayer And Taxpayer Representative Must Receive Notice To Activate Appeal Deadline

The Michigan Supreme Court has affirmed that the limited 35-day period for a taxpayer to appeal a final tax assessment begins only after the Michigan Department of Treasury issues copies of the final assessment to both the taxpayer and any designated representative.1

Background

Two unrelated Michigan corporate taxpayers, which operated multiple convenience stores in Michigan, executed power of attorney forms each authorizing a designated representative to act on their behalf with respect to sales and use tax matters. These forms were filed with the Department in a timely fashion.2

The taxpayers were each audited for sales tax by the Department and disallowed a food deduction. Upon completion of their respective audits, the taxpayers and their representatives were issued preliminary decisions and orders of determination. Though the Department claimed to have sent each of the taxpayers a copy of their final assessment via certified mail, the taxpayers denied having received this correspondence. The designated representatives of the taxpayers were not initially contacted by the Department regarding the final assessments. Only after inquiring about the status of the assessments to the Department were the taxpayers' representatives provided copies of the final assessments. The final assessments were received by the taxpayers' representatives only after the 35-day statutory period within which to appeal the assessments to the Michigan Tax Tribunal had expired. The taxpayers filed appeals with the Tax Tribunal disputing the final assessments within a week of their receipt by their respective representatives.

In response to the appeals, the Department argued that the Tax Tribunal lacked jurisdiction because the appeals were not filed within 35 days after the dates of issuance of the final assessments. The taxpayers contended that because statutory notice had not been given to their appointed representatives, the appeals period had not been triggered upon initial issuance of the final assessments and their appeals had been filed in a timely manner.

The Tax Tribunal denied the Department's motion for summary disposition in both cases, holding that notice to the taxpayer alone was not sufficient to initiate the 35-day period, but notice to the taxpayer's designated representative was also required.3 Based on the merits of each case, the Tax Tribunal cancelled the tax assessments.

The Department appealed this decision by right to the Court of Appeals...