Michigan - Multistate Tax Compact-related refund claims due March 31, 2014 

March 21: Taxpayers considering filing amended 2012 Michigan corporate income tax returns and electing the Multistate Tax Compact allocation and apportionment provisions need to act quickly.

Failure to file such returns by March 31, 2014, may result in an inability to claim a refund—even if the validity of the election is eventually upheld by the Michigan Supreme Court.


Under Michigan law, all refund claims challenging the validity of a tax law as violating the Michigan or U.S. Constitutions must be filed within 90 days after the date set for filing a return.

Michigan attempted to disallow the Multistate Tax Compact election effective for tax years beginning after January 1, 2011, by legislatively amending the Compact.

It has been asserted by some that this legislation may be considered unconstitutional as it attempts to unilaterally amend the Compact’s provisions, rather than repealing the Compact in its entirety.

Pending litigation

Litigation addressing the Compact election issues remains pending before the Michigan Court of Appeals: Anheuser-Busch, Inc. v. Dep’t of Treas., LC No. 11-85-MT (Mich. Ct. Cl. Jun. 6, 2013); and Lorillard Tobacco Co. v. Dep't. of Treas., LC No. 11-000093-MT (Mich. Ct. App.).

Also, the Michigan Supreme Court in January 2014 heard oral arguments in International Business Machines, Corp. v. Dep’t of Treasury. In the course of its questioning, the state high court focused primarily on whether the mandatory single-sales factor apportionment formula in the Michigan Business Tax (MBT) Act impliedly repealed the Compact election.

At the outset of the hearing, the high court chose to set aside the issue of whether the Compact was a binding interstate compact, and focused instead on the potential statutory conflict between the MBT single-sales apportionment formula and the three-factor Compact election. On multiple occasions, the justices noted that implied repeal is highly disfavored, particularly in cases such as this, in which the statute at issue requires express repeal. Although the high court does not have a specific timeline for issuing an opinion, most opinions are issued in May or June following the term.

Filing amended returns

Although it is not yet clear whether Compact election refund claims will be subject to the 90-day statute of limitations, taxpayers may want to consider filing amended 2012 corporate income tax returns electing the Compact’s apportionment provisions. Such amended returns would need to be filed by March 31, 2014.

Taxpayers electing to file under the Michigan Business Tax (MBT) in 2012 also may need to consider filing any amended returns making the Compact election by March 31, 2014.

For more information, contact a KPMG State and Local Tax professional:

Dale Kim


Dave Turzewski


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