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April 04, 2014

Taxpayer has 35 days from date MI Dept. of Treasury issues notice of decision to taxpayer and representative to appeal tax decision.

In Fradco, Inc. v. Dept. of Treasury, the Michigan Supreme Court clarified that when a taxpayer has appointed a representative, the 35-day period for appealing adverse tax decisions (MCL 205.22(1)) does not begin to run until the Michigan Department of Treasury (the “Department”) issues notice of the assessment to both the taxpayer and the taxpayer’s representative.  In this case, the appellee taxpayers had retained certified public accountants (CPAs) to handle their tax matters and granted the CPAs power of attorney to act as their official representatives.  After the Department disallowed certain sales tax deductions and conducted audits, the Department ultimately issued final assessment notices to the taxpayers but did not provide their CPAs with copies.  When the CPAs finally received copies, the deadline for appealing the decisions had passed.  The Court held that under MCL 205.28 and 205.8, the Department is required to provide notice to the taxpayer, and, if the taxpayer has appointed a representative, it must also provide the representative with copies of the notices.  MCL 205.22 provides that the appeal clock begins once the Department issues a final assessment.  The Court concluded that notice of the final assessment and issuance of the final assessment are “one and the same,” meaning that satisfaction of both notice requirements must occur “before issuance of the assessment is deemed to have occurred, starting the appeal period.”  Finally, the Court noted that the Michigan Court of Appeals was erroneous when it implied that the Department is required to show that the taxpayer and its representative actually received the notice (by stating that the appeal period begins when the representative received the notice, not when the Department issued the notice).  Accordingly, the Court vacated that portion of the Court of Appeals opinion, but otherwise affirmed its ruling.

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