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154668-70 - Ally Financial v State Treasurer

Ally Financial, Inc,
 
Joseph J. Shannon
 
Plaintiff-Appellant,
 
v
(Appeal from Ct of Appeals)
 
 
(Ct of Claims – Talbot, M.)
 
State Treasurer, State of Michigan, and Department of Treasury,
 
Jessica A. McGivney
Emily Zillgitt
 
Defendants-Appellees.
 
 
_____________________________
 
 
 
 
 
Santander Consumer USA, Inc.,
 
 
 
 
 
 
Plaintiff-Appellant,
 
v
 
 
 
 
 
State Treasurer, State of Michigan, and Department of Treasury,
Defendants-Appellees.
 
_____________________________
 
 
 
 
 
Santander Consumer USA, Inc.,
 
 
 
Plaintiff-Appellant,
 
v
 
 
 
 
 
State Treasurer, State of Michigan, and Department of Treasury,
Defendants-Appellees.
 

Summary

Plaintiffs are lenders who provided financing for the purchase of motor vehicles from various dealerships. When a purchaser defaulted and the contract had an unpaid balance after repossession and resale, plaintiffs sought under MCL 205.54i of the General Sales Tax Act a refund of the sales tax paid on the installment sales that resulted in bad debts. The Michigan Department of Treasury rejected the claimed refunds on the grounds that the repossessed property is excluded under the act, that plaintiffs failed to submit the proper documentation, and that plaintiff Ally Financial’s election forms were insufficient to determine whether Ally or the dealerships were entitled to the refunds. Plaintiffs filed suit in the Court of Claims, which granted summary disposition to the Department on several grounds: (1) accounts in which the property was repossessed are not “bad debts” under MCL 205.54i, regardless whether a balance remained after the repossessed property was sold; (2) the Department could require plaintiffs to submit RD-108 forms to support their claims; and (3) plaintiff Ally’s election forms only covered “currently existing” and future accounts, and accounts that had already been written off for tax purposes were not “currently existing.” The Court of Appeals affirmed in a published opinion, agreeing with the Department on all issues. The Supreme Court has directed oral argument on plaintiffs’ applications for leave to appeal to address: (1) whether MCL 205.54i prohibits partial or full tax refunds on bad debt accounts that include repossessed property; (2) whether the Court of Appeals erred in giving the Department’s interpretation of MCL 205.54i respectful consideration in light of MCL 24.232(5); (3) how the Supreme Court should review the Department’s decision to require RD-108 forms pursuant to MCL 205.54i(4) and, under that standard, whether the decision was appropriate; and (4) whether the Court of Appeals erred in holding that Ally Financial’s election forms did not apply to accounts written off prior to the retailers’ execution of the forms.