Michigan Tax Changes - November 2024
Week Of 11.04.2024
Michigan Property Tax—U.S. Appeals Court decertifies Michigan takings clause class action.
The U.S. Court of Appeals for the Sixth Circuit has decertified a proposed class action by former owners of Michigan property that claimed Wayne County violated the U.S. Constitution's Takings Clause when the county kept all of the proceeds from tax foreclosures, not just the amount necessary to cover the tax debt. The Court of Appeals noted that after the district court certified the putative class, several subsequent opinions by the Court of Appeals explained how foreclosure auctions implicated the Takings Clause, and clarified how class-action takings cases should work. Under those decisions, a plaintiff can sue for surplus equity when there is no public auction, but not when there is one. And surplus equity claims are unmanageable in takings class actions, which, still require a rigorous analysis of Federal Rule of Civil Procedure Rule 23's requirements, which the district court failed to do. Accordingly, the Court of Appeals vacated the district court's certification order because the district court left too many questions unaddressed on a thin record, and the Court of Appeals has little understanding of how this suit would progress as a class action. The case was remanded for further proceedings. (Bowles v. Sabree, U.S. Ct. App., 6th Cir., Dkt. No. 23-1256, 11/04/2024.)
Michigan Sales and Use Tax Rates—Michigan sets prepaid sales tax rates for fuel for December 2024.
The Michigan Department of Treasury announced that, effective for the period December 1, 2024 through December 31, 2024, the prepaid sales tax rate for the purchase or receipt of gasoline will decrease to 16.8¢ per gallon from the November 2024 rate of 17.2¢ per gallon. Additionally, for the period December 1, 2024 through December 31, 2024, the prepaid sales tax rate for the purchase or receipt of diesel fuel will decrease to 19.2¢ per gallon from the November 2024 rate of 19.3¢ per gallon. The prepayment rates for both gasoline and diesel fuel are set every month by the Department. (Michigan Revenue Administrative Bulletin No. 2024-17, 11/04/2024.)
Michigan Sales & Use Taxes—Michigan sets prepaid sales tax rates for fuel for December 2024.
The Michigan Department of Treasury announced that, effective for the period December 1, 2024 through December 31, 2024, the prepaid sales tax rate for the purchase or receipt of gasoline will decrease to 16.8¢ per gallon from the November 2024 rate of 17.2¢ per gallon. Additionally, for the period December 1, 2024 through December 31, 2024, the prepaid sales tax rate for the purchase or receipt of diesel fuel will decrease to 19.2¢ per gallon from the November 2024 rate of 19.3¢ per gallon. The prepayment rates for both gasoline and diesel fuel are set every month by the Department. (Michigan Revenue Administrative Bulletin No. 2024-17, 11/04/2024.)
Minnesota Cigarette, Alcohol & Miscellaneous Taxes—Minnesota court finds rebates not gross receipts under wholesale drug distributor tax.
The Michigan Supreme Court has held that amounts that were invoiced to a wholesales drug distributor's customers for the purchase of wholesale legend drugs—but were either credited to the customer's account or returned via check pursuant to a rebate agreement—are not included in its "gross revenues" for purposes of the Wholesale Drug Distributor Tax. The court held that the plain meaning of "gross revenues," defined as "total amounts received in money or otherwise," is the entire amount that a taxpayer comes into possession of either through money or non-monetary benefits and goods. Furthermore, for something to be included in a taxpayer's "gross revenues," the taxpayer must have come into possession of an amount from a third-party. In this case, the taxpayer does not have discretion in paying the rebate amounts to customers once earned, and so the taxpayer cannot reasonably come into possession of or get from some outside source the rebate amounts that it is contractually obligated to pay out to customers. Therefore the rebate amounts that the taxpayer is contractually obligated to pay cannot constitute part of the "total amounts received in money or otherwise." (Dakota Drug, Inc. v. Commissioner of Revenue, Minn. S. Ct., Dkt. No. A23-1973, 11/06/2024.)