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A Better Partnership
March 30, 2012

COA Opinion: Single Business Tax Act does not reach goods shipped to an end-user out of state

In Uniloy Milacron USA, Inc v Department of Treasury, No 300749, the Court of Appeals considered whether the Single Business Tax Act apportioned certain sales to Michigan. Plaintiff Uniloy Milacron USA, Inc. ('Uniloy') manufactures molds. Uniloy entered into a distributor agreement with Uniloy Milacron, Inc. ('UMI'), an affiliated corporation. Under the agreement, UMI would solicit and obtain orders for Uniloy's products. Uniloy would then ship the products directly to the end-user. On its Michigan tax return, Uniloy only apportioned to Michigan sales shipped to end-users residing in Michigan. Following an audit, the Department of Treasury decided this was improper and assessed a deficiency. Uniloy paid under protest and filed this action in the Court of Claims. The Court of Claims held in Uniloy's favor. Treasury appealed. The Court of Appeals affirmed.

MCL 208.52 provides, in pertinent part: 'sales of tangible personal property are in this state in any of the following circumstances: . . . (b) For tax years beginning on and after January 1, 1998, the property is shipped or delivered to any purchaser within this state regardless of the free on board point or other conditions of the sales.' The Court of Appeals held that MCL 208.52 unambiguously only included goods shipped to a purchaser in Michigan. Here, the disputed goods were not shipped to a purchaser in Michigan; they were shipped out of state. Accordingly, MCL 208.52 did not apply, and Treasury was incorrect in assessing a deficiency.

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