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A Better Partnership
September 09, 2009

COA Opinion: Interest income from loans secured by Michigan property and loans made to Michigan customers are taxable even if payment was made to an out-of-state mailing address

The Court of Appeals published its opinion in PNC Bank National Association v. Department of Treasury, No. 283560, on September 8, 2009.' The Court of Appeals affirmed the Court of Claims' grant of summary disposition to the Michigan Department of Treasury (DOT).' The DOT made a' tax assessment against a national banking association based in Pennsylvania' by including' interest income from loans,' which were either loans secured by real property located in Michigan or were unsecured loans made to Michigan customers, when calculating its Single Business Tax (SBT).' The Court of Appeals rejected the association's argument that the interest income should not be included in its SBT tax base because it received payments from these Michigan loan transactions at an out-of-state mailing address.' In interpreting the' applicable statute that was in effect' during the relevant tax years,' MCL '' 208.65 (repealed December 31, 2007), the Court of Appeals held that the association received interest income as a result of business activity within Michigan and therefore must pay Michigan tax on that interest.' We posted about this case in more detail earlier here.

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