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A Better Partnership
August 14, 2013

COA concludes that a boat that docked in Michigan for unplanned repairs during transit to Illinois was subject to use tax

Taxpayer purchased a boat in Rhode Island and hired a captain to sail the boat to port in Chicago.  That trip was interrupted, however, by mechanical failures of the Michigan coast.  This failure required lengthy stops at Michigan ports for repairs and tests.  These stops occurred within ninety days of purchase, thus giving rise to a statutory presumption that the boat was subject to a use tax, which applies to tangible property that is used, stored or consumed in Michigan.  The Court of Appeals concluded that the taxpayer could not rebut that presumption in this case, particularly where there was no exception for these types of "exigent" circumstances. Regardless of the reason, the boat was used and stored in Michigan.  Also, the taxpayer could not use the statutory "temporary" exception, excepting property just in the state temporarily, where there was record evidence that, after the boat made it to Chicago, it was returned to Michigan for winter storage.

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